On August 14, 2020, the Department of Justice (the “DOJ”) issued its first Foreign Corrupt Practices Act (the “FCPA”) advisory opinion in almost six years.[1] Through its Opinion Procedure, the DOJ periodically issues advisory opinions on whether an anonymous party’s prospective conduct would violate the FCPA.[2] In this particular opinion (the "Opinion”), the DOJ states that it will not take enforcement action against a U.S. investment advisory firm that sought to pay a subsidiary of a foreign, government-owned bank for services related to a sale of assets. The Opinion concludes that the proposed payment did not reflect a corrupt intent to influence any “foreign official.”
This rare DOJ opinion release is important for two reasons. First, it is a reminder that the Opinion Procedure is available for companies to gain valuable assurances about potential FCPA issues if they are willing to endure the long and sometimes invasive opinion process. Second, it is another indication that companies are doing all they can to avoid violating the FCPA because they perceive that FCPA enforcement is a DOJ priority. This is a well-founded perception when one considers that the DOJ published its updated and detailed FCPA Resource Guide in July[3] and continues to aggressively pursue FCPA enforcement actions even amid the pandemic.[4]
Companies should thus continue monitoring FCPA enforcement trends and consider, with the advice of counsel, whether they should use the DOJ’s Opinion Procedure to vet a potential FCPA issue.
The DOJ’s FCPA Opinion Procedure
The FCPA prohibits the bribing of foreign officials to obtain or retain business[5] and is meant to “halt those corrupt practices, create a level playing field for honest businesses, and restore public confidence in the integrity of the marketplace.”[6] The FCPA covers U.S. and foreign public companies listed on a U.S. stock exchange (issuers),[7] U.S. companies and citizens (domestic concerns),[8] and any person within the territorial United States.[9]
The DOJ’s FCPA Opinion Procedure allows issuers and domestic concerns[10] to request an anonymous opinion from the DOJ on whether its “prospective—not hypothetical—conduct” would violate the FCPA’s antibribery provisions.[11] The requesting party must provide the DOJ with all relevant materials and make a “full and true disclosure” of information related to the prospective conduct.[12] The resulting opinion can provide valuable assurances to the requesting party but has no application to any party that does not join the request.[13]
The opinion process can be time-consuming and potentially invasive. It could take months, sometimes as much as a year, to receive an opinion. Additionally, the DOJ will frequently ask for supplemental information, which delays the issuance of the final opinion[14] and could be quite involved. For example, the requesting company in the Opinion waited more than nine months to receive the DOJ’s answer and submitted supplemental information four times.[15] The process could also put the DOJ on notice of a practice it may consider to be an FCPA violation.
The Opinion
The Opinion addresses whether a U.S. investment advisor can pay a subsidiary of a foreign, government-owned bank for services related to a sale of assets.
In early 2017, the investment advisor (the “Requestor”) sought to purchase assets valued at $47.5 million from a subsidiary of a foreign bank (the “Country A Office”).[16] The bank was indirectly owned by a foreign government.[17] In connection with the purchase, the Requestor received legitimate assistance from a different foreign subsidiary of the same bank (the “Country B Office”).[18] In February 2019, the Requestor purchased the assets from the Country A Office.[19] A month later, the Country B Office sought from the Requestor a fee of $237,500—0.5% of the assets’ face value—as compensation for its services...
