On January 21, 2022, the Department of Justice (DOJ) quietly issued a rare advisory opinion, applying the Foreign Corrupt Practices Act (FCPA) to a unique factual scenario. After a long pause on opinions from 2014 to 2020, this is the DOJ's second FCPA opinion in two years, which may suggest a reinvigoration of the advisory opinion process. This Legal Update provides further detail and discusses the implications for companies doing business around the world.
A Revitalized Advisory Opinion Process
The FCPA opinion process allows issuers or “domestic concerns” to request, in writing, an opinion about whether prospective conduct violates the FCPA’s anti-bribery provisions. Requesters must submit all supporting documentation, and the request must relate to prospective conduct, not purely hypothetical situations. Although the opinions are neither binding on the requesting party nor of precedential value, an opinion that certain conduct does not violate the FCPA creates a rebuttable presumption of lawfulness under the FCPA. Although the advisory opinion process has remained unchanged in the law, it fell into near-total disuse over the past decade.
The last FCPA opinion was issued in 2020 and concerned an investment advisor’s payment to a subsidiary of a foreign bank partially owned by the government. Before that, the DOJ had not issued an opinion since 2014, when it advised a company considering an acquisition that it would not take action against it for conduct that the foreign acquisition target took because that conduct would have been beyond the scope of US jurisdiction.
A Unique Set of Facts
The 2022 opinion involved a ship that had been effectively seized, with its captain and crew detained, in foreign waters. The ship had attempted to dock in one country’s ports, but those docks were full, and the first country directed the vessel, inadvertently, to a second country’s waters to wait for dock space. The second country’s navy intercepted the ship, directed it into its harbor, detained its crew onboard, confiscated the ship’s documents and detained its captain onshore with no explanation. The captain had serious medical conditions, made worse by his detention, putting his physical safety and health in danger.
During this detention, a third party acting on behalf of the second country demanded a $175,000 payment for the release of the captain and crew. The third party refused to provide any documentation to support this payment demand. The vessel contacted US agencies for assistance in ending the detention, but those avenues failed. The vessel suspected that the payment could be for an illegitimate payment to a government official in the country.
The advisory opinion stated that this payment would not violate the FCPA. The reasoning was two-fold. First, the opinion emphasized that the payment was not being made “corruptly.” The question of whether a payment is made “corruptly” is one of intent. In this situation, the payment was being made under duress, a circumstance that does not typically support criminal liability. The opinion later put some limits on this, emphasizing that paying a bribe under “economically coercive” conditions could still very well violate the FCPA. Second, the payment would not be made to “obtain or retain business.” The ship had no current or anticipated business with the country and was there only as a result of a mistake in where to anchor temporarily. The ship had consulted with other US government agencies, a recommendation set out in the FCPA Guide; requested documentation of the payment; and only paid as a last resort. Notably, the opinion made no mention of whether the requested payment might fit into the FCPA’s facilitation payment exception, which allows companies to pay fees for routine government services such as obtaining a license or a visa.
Other Significant Considerations
The DOJ opinion did not rule out the applicability of other US laws and regulations. Should this type of situation occur again, there could be other enforcement issues depending on the geographical jurisdiction in which it occurs. For example, if this scenario were to occur in a jurisdiction where the requesting foreign government or its intermediary was subject to Treasury Department sanctions, the Office of Foreign Assets Control’s sanctions program penalties could be implicated. Similarly, an organization finding itself in a similar predicament could find itself in peril of running afoul of prohibitions on providing material support to terrorist organizations, if such an incident were to occur in jurisdictions where a government is considered a designated terrorist organization.
A European Perspective
Entities that may be subject to the FCPA as well as other anti-corruption and bribery laws, notably in the United Kingdom (under the UK Bribery Act), France (under its Sapin II Law) or other countries of the European Union, must also keep in mind potential enforcement risks based on key distinctions of other anti-bribery regimes. For instance, under the UK Bribery Act and the Sapin II Law, typical facilitation payments—regardless of the amount, frequency or location of payment—are likely to be considered criminal violations. Whether the unique fact situation presented in this advisory opinion could trigger potential exposure under other foreign bribery laws would require a fact-based legal analysis.
Guidance for Global Business
The DOJ’s issuance of two opinions through the FCPA opinion process after a nearly six-year hiatus may portend a reinvigoration of interest in corporate actors availing themselves of the process. While the DOJ’s most recent advisory opinion is limited to a unique set of facts, corporations engaged in shipping—especially in today’s environment, rife with increasingly difficult supply chain issues—may find themselves in similar factual scenarios that may implicate not only the FCPA but a host of other US, UK and EU laws and regulations.
At a time when the ongoing pandemic and rising tensions in both Eastern Europe and Asia have already complicated global economic activity, companies around the world would do well to remember the broad extraterritorial reach of the FCPA and other US statutes. The DOJ has clearly articulated its intention to pursue an aggressive application of these laws in the coming months and years—particularly where increased enforcement can help support US national security and strategic interests. At the same time, multinational companies should be mindful of the various distinctions of anti-bribery regimes across jurisdictions, including the European Union, and should be planning accordingly.