Last week, the Criminal Division of the U.S. Department of Justice (DOJ) issued new guidance regarding enforcement of the Foreign Corrupt Practices Act (FCPA), wherein it addressed an inquiry by a United States investment advisor regarding its intent to pay a foreign state-owned bank for assistance in acquiring a portfolio of assets.
The FCPA prohibits people and entities in the United States from “corruptly” (i.e. with an intent or desire to wrongfully influence) giving or offering anything of value to any “foreign official” to assist “in obtaining or retaining business for or with, or directing any business to, any person …” While payments to “foreign officials” are prohibited, the FCPA does not prohibit payments to foreign governments or foreign government instrumentalities.
The FCPA also establishes a procedure by which the DOJ can issue “Opinion Procedure Releases” in response to specific inquiries made a person or a corporation seeking to determine whether a particular set of acts would result in a DOJ enforcement action. Last week’s guidance was the first such release since November 2014.
In its recent guidance, the DOJ addresses whether a violation of the FCPA would occur if a U.S.-based investment advisor paid $237,500 to a subsidiary of a foreign investment bank in which a foreign government held a majority stake. The purpose of such proposed payment was to compensate the entity for its assistance in acquiring a portfolio of assets from another subsidiary of the same foreign investment bank. In its inquiry, the U.S.-based investment advisor represented that payment would be made in exchange for specific legitimate services and that the foreign bank, and not any individuals, would be the recipient of the payment.
The DOJ stated that it would not issue an enforcement action against the U.S. based advisor in connection with such conduct. It noted that payment to a foreign government instrumentality such as a foreign state-owned bank, as opposed to a foreign official, is permitted under the FCPA. It also noted that, based on the U.S.-based investment advisor’s representations regarding the specific legitimate services it received from the foreign state-owned bank, there was no evidence of a “corrupt intent.”
Like all other FCPA Opinion Releases, last week’s release has no precedential value. Only the requestor can rely on the release and only to the extent that its disclosure of facts and circumstances was accurate and complete.
The attorneys at Chilivis Grubman represent companies of all types and sizes and individuals in connection with government investigations, including those involving the FCPA. If you need assistance with any such matter, please contact us today.