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A Long Time Coming: DOJ Issues First FCPA Advisory Opinion in Six Years

On August 14, 2020, the Department of Justice issued a Foreign Corrupt Practices Act (“FCPA”) Advisory Opinion—the first of its kind in nearly six years. The DOJ’s opinion advised a U.S. investment company that the transaction fee is paid to a foreign state-owned bank’s subsidiary would not trigger an FCPA enforcement action.

The FCPA generally prohibits United States’ companies or individuals from giving or offering bribes to foreign officials to obtain or retain business. The FCPA required the Attorney General to create a procedure that allows companies to seek guidance on specific FCPA compliance concerns, thus the DOJ FCPA Opinion Procedure was born. Companies can ask the DOJ whether “specified, prospective—not hypothetical—conduct” violates the FCPA.

While the FCPA opinion procedure has been in place since the 1980s, requests have significantly diminished over the years. While the cause of the decline is unclear, it is likely due to several reasons. First, the opinion procedure is a time-intensive public process that can potentially divulge sensitive information about a prospective transaction. Another reason for its rare use is the amount of time it takes to receive a final opinion—often taking many months, or even a year, and requiring supplemental information gathering. Such delays are often not conducive to a pending business transaction. Additionally, some companies are reluctant to draw federal prosecutors’ attention to a potential illegal transaction and instead opt for legal opinions and compliance oversight from outside law firms. Nonetheless, the opinion procedure can be helpful for companies to receive surety that certain transaction complies with the FCPA.

In this instance, an unnamed U.S. based investment advisor, which manages private funds serving institutional investors, sought guidance from the DOJ in November 2019 as to whether its payment to a foreign state-owned bank’s affiliate would trigger an FCPA enforcement action. According to the advisory opinion, the requestor bought assets worth $47.5 million from a subsidiary of the foreign bank in February 2019. In connection with the purchase, the requestor sought and received analytical assistance from another of the foreign bank’s subsidiaries. A month after the purchase, the assisting-subsidiary asked the requestor for a $237,500 transaction fee equal to 0.5% of the assets’ value. The requestor sought an advisory opinion as to whether payment of that fee triggered an enforcement action.

Nine months later, the DOJ concluded that the payment did not amount to a foreign bribery violation. Relying on the facts as represented by the requestor, the DOJ found that there was no information demonstrating that the requestor intended to corruptly influence a foreign official through the payment of the transaction fee. The DOJ reasoned that the FCPA did not prohibit the payment because it went to a foreign government agency (the investment bank’s subsidiary) and not to an individual public official—a fact that was confirmed by the subsidiary’s Chief Compliance Officer. Additionally, the payment was made in exchange for bona fide services rendered during the transaction.

While the DOJ’s advisory opinion will have no precedential value for companies other than the requestor, it is still helpful to obtain insight into the DOJ’s interpretation and application of the FCPA. For additional guidance, the DOJ and SEC recently released an FCPA Resource Guide, which provides information for a corporate leniency program. 

© Polsinelli PC, Polsinelli LLP in CaliforniaNational Law Review, Volume X, Number 231
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About this Author

Brian F. McEvoy Litigation Attorney Polsinelli Atlanta, GA
Office Managing Partner | Practice Chair

Brian McEvoy is an accomplished litigator with a well-earned reputation for working tirelessly to achieve the best outcomes for clients and for thinking creatively and strategically to resolve difficult problems with efficiency and professionalism. Brian is a former federal prosecutor with a practice focus on white collar criminal defense and a special emphasis in health care fraud matters. During his service as a federal prosecutor, he received special commendation from the Department of Health and Human Services by receiving the Inspector General's Integrity Award for...

404-253-6021
Emil Infante Business Lawyer Polsinelli Law Firm
Shareholder

Clients rely on Emil Infante for his strategic counsel in complex aspects of business law. Emil focuses his practice on family office services, securities, financial regulation, banking, restructuring, cross-border transactions and international dispute resolution. His experience includes working with the Foreign Corrupt Practice Act (FCPA), anti-corruption, anti-money laundering investigations and compliance within the U.S. and Latin American markets, as well as experience with the Magnitsky Act.

Emil leverages his international experience when advising sovereign nations, foreign...

305.921.1819
Melissa S. Ho Shareholder Phoenix Antitrust, Antitrust - Health Care Compliance, Fraud and Abuse, Stark, Financial and Securities Litigation, Financial Technology, Regulation Government Investigations, Health Care Litigation
Shareholder

Melissa Ho is a trial attorney with a detailed understanding of government regulations and business litigation. A former prosecutor, she is sympathetic to the disruption and chaos a government inquiry and criminal investigation can cause. 

Melissa defends individual clients against a wide variety of criminal allegations, including health care fraud, qui tam, RICO violations, bank fraud, real estate fraud, mortgage fraud, foreign corrupt practices, securities fraud, water and air quality violations, government corruption, procurement and public fraud, professional misconduct, civil...

602-650-2028
Grace Zoller Polsinelli Atlanta Government Investigations False Claims Act Defense Internal Investigations
Associate

Grace Zoller assists clients in all aspects of white collar criminal defense and internal corporate investigations, from discovery through sentencing, including motion practice and trial preparation. Grace helps clients respond to all types of government investigations based on alleged violations of various civil, criminal, and administrative laws, including the False Claims Act and the Anti-Kickback Statute. She mainly focuses her practice in healthcare fraud defense, but has represented clients from multiple industries during various federal economic criminal matters.

Prior to...

404-253-6077
Andrew T. Fox Phoenix Polsinelli Government Investigations Labor and Employment Commercial Litigation Litigation and Dispute Resolution
Associate

As a member of Polsinelli’s Government Investigations practice, Andrew assists clients in all aspects of white collar criminal defense and internal corporate investigations. Working to understand each client’s unique situation, he helps guide clients through government inquiries and provides counsel that aligns to their business strategies. Andrew has experience drafting briefs, memoranda and responding to discovery requests.

Prior to joining Polsinelli, Andrew served as a law clerk to The Honorable Judge Douglas L. Rayes on the United States District Court for the District of...

602-650-2014
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