The U.S. Department of Justice (DOJ) has published its first Foreign Corrupt Practices Act (FCPA) Advisory Opinion in six years.
A U.S. investment firm sought to make a payment to a local government-owned entity for services rendered in connection with an asset purchase. The firm represented that the payment was for legitimate services and would not be diverted to any individual.
On this basis, the DOJ advised that it would not plan to take any enforcement action. According to the 2020 Resource Guide, “[t]he FCPA prohibits payments to foreign officials, not to foreign governments.” However, as per the Guide, companies should "take steps to ensure that no monies are used for corrupt purposes, such as the personal benefit of individual foreign officials.” This includes clearly defining and documenting relationships with third parties, particularly where government connections are involved.
The investment firm may have decided to seek an opinion because it did not have a written agreement with the government entity, which the Resource Guide notes could represent a red flag. Nonetheless, the DOJ advised it would not enforce given that there was "no indication that the money will, in fact, be diverted to any individual.”
This is not the first time that the DOJ has opined on payments to government-related entities (as opposed to individuals). For further information please click here.
The Department does not presently intend to take any enforcement action in response to the fee Requestor intends to pay the Country B Office. This is because there is no information evincing a corrupt intent to offer, promise, or pay anything of value to a “foreign official” in connection with the contemplated payment to the Country B Office.