Department of Justice Publishes Business Persons' Resource Guide to the FCPA

November 19, 2012

1083202_business_man.jpgThe Criminal Division of the United States Department Of Justice has just published a 125-page "Resource Guide" to give both non-lawyers and lawyers at least some clarification in the real world workings of the Foreign Corrupt Practices Act ("FCPA"). Link to the FCPA Resource Guide here: FCPA Guidebook 2012.pdf. The Resource Guide is written in a conversational, non-legalistic style that business persons will likely find helpful. Business persons who conduct business in foreign countries have complained for many years that the practical workings of the FCPA were ambiguous, at best. Employees of American corporations abroad were unsure whether whether relatively minor conduct might be enough to amount to a violation of the law subjecting their employer and themselves to horrific penalties. There were many rumors of "zero tolerance" for even the most abstract payments and no place to quickly consult for an authoritative answer. The Resource Guide, while not perfect, at least partially fills that gap.

The most valuable part of the Resource Guide is the section that lists numerous travel, gift and entertainment hypotheticals that sound very much like real life situations that a corporation engaging in foreign commerce might run into. The first hypothetical for example finds no fault with an American company which provides business class airfare to foreign senior officials traveling a long distance to examine the company's facilities and products especially since the company's own employees would be entitled to such an upgraded ticket if they were on a journey of similar length. The hypothetical continues to find no fault with taking the foreign officials to a reasonably priced dinner, a baseball game and a play. The line is crossed in the hypothetical, however if the foreign officials are given first class tickets, told to bring their spouses and given a week long, all expenses paid trip to Las Vegas after the review of the more mundanely located factory.

Continue reading after the jump.

A second interesting hypothetical considers the legality of a small payment to a governmental clerk in a foreign country in order to encourage the clerk to stamp an application for an environmental permit. The permit should be ministerially granted but bitter experience has shown the applications for the permit can sit on the recalcitrant clerk's desk for months awaiting his approval when such a payment is not made, The Resource Guide allows this payment because it would qualify as a facilitating payment as it is a one time small amount to obtain a routine, non-discretionary governmental service, that is the stamping and filing of the application.

Another section of the Resource Guide addresses the question of who is a "foreign official" the term of art in the FCPA for those who must not be subverted. Defense counsel dealing with payments to an employee of a foreign state-owned company have argued such persons are not foreign officials and therefore payments to them are exempt. The Resource Guide sides with the prosecution on this issue and finds such employees to be government officials.

One commentator was quoted as saying that the Resource Guide is basically a scrapbook of past DOJ and SEC successes with little new information, but at least it is a convenient starting point for answers where there may be no other quick reference source.