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« Barclays fined for poor books and records retention | Main | Ukraine journalist beaten after exposing graft »
Friday
Dec272013

In year's first FCPA opinion, DOJ clears ‘humanitarian aid’

On December 19, the Justice Department published FCPA Opinion Procedure Release No. 13-01, ruling that a law firm partner could pay some medical expenses of foreign official's daughter.

The lawyer's firm billed the foreign country over $2 million for the past 18 months, and expects to bill the same amount in 2014.

The foreign official involved works in the country's attorney general's office. The partner became friends with the foreign official, who doesn't have the financial means to pay for medical treatment his daughter needs in another foreign country. The treatment will cost between $13,500 and $20,500, the DOJ said.

The lawyer isn't the primary partner responsible for the firm's relationship with the foreign country's government.

He or she also represented to the DOJ that:

  • The payment is purely humanitarian, with no intent to influence the decision of any foreign official in the foreign country to award work to the law firm. 
  • The money used to pay for the medical treatment will be lawyer's own personal funds, and he or she won't be reimbursed by the firm.
  • Payments will go directly to the medical facility where foreign official's daughter will receive treatment.
  • The foreign official will pay for the costs of his daughter’s related travel to the third country where she'll receive treatment.
  • Hiring lawyers in the foreign country is a pubic tender process, backed by a published ‘reasoned decision’ for the hiring.
  • The attorney general of the foreign country said the payment of the medical expenses wouldn't be illegal under local law and won't influence the decision to award or withhold work to the law firm.

The DOJ said in its opinion release that ‘a person may violate the FCPA by making a payment or gift to a foreign official’s family member as an indirect way of corruptly influencing that foreign official. See United States v.  Liebo, 923 F.2d 1308, 1311 (8th Cir. 1991).’

So paying the medical expenses, or any other expenses, of a foreign official’s family member could violate the FCPA.

However, “the FCPA does not per se  prohibit  business relationships with, or payments to, foreign officials.” FCPA Opinion Release 10-03 at 3 (Sept. 1, 2010). Rather “the Department typically looks to determine whether there are any indicia of corrupt intent, whether the arrangement is transparent to the foreign government and the general public, whether the arrangement is in conformity with local law, and whether there are safeguards to prevent the foreign official from improperly using his or her position to steer  business to or otherwise assist the company, for example through a policy of recusal.”

But in this case, the DOJ concluded, ‘the facts represented suggest an absence of corrupt intent and provide adequate assurances that the proposed benefit to Foreign Official’s daughter will have no impact on Requestor’s or Requestor’s Law Firm’s present or future business with Foreign Country A.’

Mike Koehler posted a copy of FCPA Opinion Procedure Release No. 13-01 here.

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Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.