Late last week, the Department of Justice (DOJ) issued a Foreign Corrupt Practices Act (FCPA) Opinion 20-1, its first such opinion in almost six years. In the Opinion, the DOJ advised a U.S.-based investment advisor that the DOJ did not intend to take any enforcement action related to the payment of certain fees to a foreign investment bank indirectly owned by a foreign government. Unfortunately, the Opinion offers little insight into DOJ’s FCPA enforcement priorities.
The facts outlined in the Opinion are relatively straightforward. A multinational firm headquartered in the United States (the “Requestor”) received assistance from a subsidiary (the “Country B Office”) of a foreign investment bank indirectly owned by a foreign government related to a purchase of assets from a different subsidiary (the “Country A Office”) of the same bank. The Country B Office requested fees in the amount of $237,500, which was equal to 0.5% of the purchased assets, to compensate for the assistance it provided on the Requestor’s behalf.
In stating that it did not intend to commence an enforcement action, the DOJ referenced the following factors: (1) the payment was to a foreign government instrumentality, namely the Country B Office, and not a specific individual or foreign official; (2) there was no evidence that the payment was intended to corruptly influence a foreign official; (3) the Requestor received specific, legitimate services from the Country B Office, and (4) the fees were commercially reasonable and commensurate with the services provided. The Opinion did not provide detailed information regarding the entities involved, the services provided, or any further clarity into the issues presented.
Perhaps the biggest takeaway is the lack of insight the Opinion provided. It was issued as part of the DOJ’s Opinion Procedure Release, a scarcely used procedure that allows companies subject to the FCPA to obtain an opinion from the DOJ regarding whether certain specified, prospective, not hypothetical, conduct conforms with the DOJ’s FCPA enforcement policy. Prior to this current release, the last opinion release occurred in November 2014, which concluded a run of roughly only two releases per year for the prior 20 years.
There are several reasons why the Opinion Procedure Release is rarely used. For one, the length of time for an opinion to be issued can be considerable. In the instant case, the Opinion was issued about nine months after the initial request was submitted, and included several supplemental information requests. In addition, even with the use of pseudonyms, companies may be hesitant to request opinions given the public nature of the advice and the fact that they are consulting a prosecutorial body about the legitimacy of a transaction. Finally, the opinion process does not give comfort to companies that they will never be prosecuted. Should other facts come to light that were not provided to the government before the opinion was issued, the DOJ is free to prosecute. This is a risk most companies choose not to take.
The Opinion comes on the heels of the DOJ’s release of an updated version of its Resource Guide to the FCPA, which may suggest a continued effort by the DOJ to keep the FCPA unit visible during the coronavirus pandemic. International travel has stalled and FCPA investigations have most certainly languished. However, the DOJ could have relaunched its use of the opinions process with a more significant analysis that would have made a greater splash with FCPA practitioners. The six-year dry spell without opinions and the issuance of this generic analysis likely signals that the FCPA opinions procedure will continue to remain largely dormant.