DOJ Issues Expedited FCPA Opinion Procedure | Porter Hedges LLP

In late January 2022, the Department of Justice (“DOJ”) issued Opinion Procedure Release 22-01, its first Foreign Corrupt Practices Act (“FCPA”) Opinion since 2020. The opinion states that based on the specific facts presented by the party requesting the opinion (the “Requestor”), a $175,000 payment to a foreign intermediary in order to obtain the safe release of a boat’s captain, crew, and vessel would not trigger an enforcement action by the DOJ because the requested payment would not be made “corruptly” or to “obtain or retain business.”

The DOJ FCPA Opinion procedures allow companies to obtain an opinion from the Attorney General as to whether certain specified, prospective, and not hypothetical conduct conforms to DOJ’s present enforcement policy. Although FCPA Opinions do not expressly apply to parties that do not join the request for the opinion, they are broadly used to understand the DOJ’s present enforcement policies. This opinion was originally requested on October 19 and 20, 2021. Although opinions often take months to receive, in light of the risk of imminent harm to the health and well-being of the people noted in the request, the DOJ issued a short preliminary opinion to the Requestor the next day. Additional information was provided by the Requestor in November and December of 2021, and the DOJ issued its formal opinion on January 21, 2022.

Background

The central issue in the request involves the captain, crew, and vessel of an unnamed company that were detained by the naval forces of an unnamed country (“Country A”). The Requestor’s vessel left Country A and arrived in Country B, but was unable to dock because Country B’s ports were all occupied.  The Requestor’s vessel was sent to anchor outside of Country B for two weeks. The captain of the vessel inadvertently anchored in Country A’s waters, and the navy of Country A intercepted the vessel and directed that it dock in a Country A harbor. The captain was then removed from the vessel, arrested, and detained in a jail. He was known to have serious medical conditions that were exacerbated by his detention. The crew’s documents were also confiscated. 

Shortly after the captain was detained and the crew’s documents were taken, a third party intermediary approached the Requestor and demanded a $175,000 payment to release the captain and permit the vessel to leave Country A’s waters. The Requestor attempted to discover the formal basis for the payment by requesting an invoice or other documentation to determine the charges and the enumerated fine amount, to no avail. The Requestor also sought assistance from U.S. government agencies to free the captain and allow the vessel to leave Country A, also to no avail. As a result, the Requestor sought an opinion from the DOJ about whether it would bring an enforcement action if the payment was made.

The DOJ responded that it did not presently intend to bring an FCPA enforcement action because the payment would not be made “corruptly” or to “obtain or retain business.” Citing United States v. Kozney, the DOJ stated that when a payment is made on threat of injury or death, the payment is not made “corruptly.” Additionally, the payment would not be made to “obtain or retain business” because the Requester had no ongoing business in Country A, the need for the payment grew out of inadvertent error, and the Requestor was transparent with the U.S. government by seeking its help to attempt to resolve the situation. The DOJ contrasted the facts in this circumstance with a scenario where the Requestor was threatened with severe economic or financial consequences if a payment was not made.  In that circumstance, a payment that may cause financial hardship in a country where a company has historical, pending, ongoing, anticipated, or sought after business relationships, may give rise to liability under the FCPA.

Conclusion and Takeaway

This opinion is a good reminder that although the DOJ views the reach of the FCPA broadly, there are limits to its reach, particularly where health and human safety are involved. 

One takeaway from this opinion is the emphasis placed on transparency and diligence undertaken by the Requestor before making the payment. By seeking additional information about the payment and exploring different avenues to resolve the situation without making the payment, the Requestor demonstrated to the DOJ that its purpose in making the requested payment was neither corrupt nor to obtain or retain business. Such considerations are important when a company is faced with difficult decisions like the Requestor’s circumstances.

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