The Department of Justice released its latest FCPA Opinion Release. The requesting company for this opinion release is stepping into a situation full of FCPA red flags. In the end, the DOJ opined that it would not bring an enforcement action based on the safeguards put in place by the company.
The company is involved in “natural resource infrastructure development” and trying to get a government contract. They want to hire a consultant who has previously and currently holds contracts to represent the foreign government
and act on its behalf and a registered agent of a foreign government pursuant to the Foreign Agents Registration Act, 22 U.S.C. § 611 et seq. Of course, the consultant is being paid on a contingency basis.
The DOJ points out that the FCPA does not “per se prohibit business relationships with, or payments to, foreign officials.” They look for these factors in the business relationship:
- indicia of corrupt intent
- transparency to the foreign government and the general public
- whether the arrangement is in conformity with local law
- whether there are safeguards to prevent the foreign official from improperly using his or her position
In this case, the company is putting extensive safeguards in place. The DOJ found the safeguards were good enough.
The consultant is an agent of the foreign government and there are situations in which the consultant will act on behalf of the foreign government, so the company should treat the consultant and its employees “foreign officials” for purposes of the FCPA.
The company is walling off the employees working on the various representations from each other and is disclosing the relationships to the relevant parties. The business relationships are permitted under local law. The obligations limit representation of the foreign government by the consultant are sufficient to ensure that the consultant will not be acting on behalf of the foreign government in acting for the company.
The walling off and limitations are actually enough to pull the consultant out from under the label of being a “foreign official.”
Sources:
- FCPA Opinion Release 10-03
- Lobbyists Aren’t Always Foreign Officials by Richard L. Cassin in the FCPA blog