The DOJ recently issued an opinion regarding the Foreign Corrupt Practices Act (FCPA), stating that it would not intend to bring an FCPA enforcement action based upon a payment of a fee to a subsidiary of a foreign investment bank that is majority-owned by a foreign government.
The FCPA prohibits paying bribes to foreign officials in exchange for help with getting or keeping business. It also requires that companies with securities issued in the United States to make and keep accurate books and records and have a system of internal accounting controls.
The DOJ has the ability to issue opinions in response to specific anticipated transactions, through a time-consuming and public request process, and this is the first FCPA opinion issued by DOJ since 2014.
The recently published FCPA opinion focused on the fact that the entity being compensated was not a foreign official, but rather was indirectly owned by a foreign government. First, the payment would not be directed to a specific individual, but rather to the subsidiary’s office and the subsidiary’s Chief Compliance Officer certified that the funds would be used for the subsidiary’s general corporate purposes. Second, the requestor did receive legitimate services from the subsidiary and the fees requested were reasonable. Ultimately, DOJ found that there was nothing to suggest that there was intent to corrupt a foreign official, and therefore, payment to the foreign subsidiary would not lead to an enforcement action.