FCPA Opinion Procedure Release 09-01


The Department of Justice released its latest Opinion Procedure Release under the FCPA: 09-01

The Requestor designs and manufactures a specific type of medical device. The Requestor’s competitors already operate and sell their products to the government of a certain foreign country and the Requestor wants to enter that market.

A senior government official laid out the foreign government’s plan to provide a specific type of medical device for patients in need in the country. The government intends to purchase the medical devices, and then subsidize the cost of such devices when it resells them to patients. The Requestor and its competitors would be allowed to participate in the program.

To get the foreign medical centers familiar with their product, the government official suggested free samples for evaluation. The Requestor must have been nervous given that a sample size of 100 units was needed for evaluation. Since each cost $19,000, that was a $1.9 million payment involving a foreign official.

Ten different medical centers will each get ten medical devices. The Requestor will select the centers that will participate in order to ensure that the participating centers have the requisite expertise, resources, and experience to successfully participate in the evaluation.

The obvious comparison is to the Iowa Beef Packers request to send free samples addressed in FCPA Review Procedure Release 81-02. But that only involved 700 pounds of beef, with an estimated total value of less than $2,000.

The key element in the DOJ’s decision in this latest release is that the devices are being provided to the foreign government, not to individual government officials. Close family members of the Government Agency’s officers or employees, working group members, or employees of the health centers are ineligible to receive a sample device except in certain, specific circumstances. Also, the names of the recipients will be published on the Government Agency’s web site for two weeks following the selection.

There is nothing inherently wrong with giving stuff to a foreign government. You just have to make sure it does not personally benefit a government official.

The DOJ does not presently intend to take any enforcement action with respect to the proposal described Opinion Procedure Release 09-01.