On August 14, 2023, the US Department of Justice (“DOJ”) issued a rare advisory opinion addressing the permissibility of corporate-sponsored travel for foreign government officials under the Foreign Corrupt Practices Act (“FCPA”).
DOJ issued the advisory opinion under its FCPA opinion program, under which US issuers and domestic concerns may obtain advance opinions from the Attorney General regarding whether certain specified, prospective—not hypothetical—conduct conforms with the Department’s present enforcement policy regarding the FCPA’s antibribery provisions.1 The opinion release procedure has attracted few customers; DOJ has released only three opinions since 2014. While an opinion is not binding on anyone beyond the party requesting it, the DOJ’s opinions continue to offer important insights into how DOJ construes and applies the FCPA in practice.
DOJ issued its last FCPA opinion release in January 2022, which concerned an unusual scenario of a prospective payment to a foreign government for release of a ship, along with its crew, that had been detained in foreign waters.2 This latest, August 2023 advisory opinion provides helpful insights on a more frequent risk area for global companies: payment of travel-related expenses for foreign officials in connection with a company’s business activities.
The advisory opinion details a request from a US-based child welfare agency (the “Requestor”) that facilitates foreign adoptions. The request states that a certain foreign country requires that officials of that country’s government meet with families that have adopted children from its country on an annual basis to ensure the success of the adoptions. In connection with this requirement, the Requestor proposed to pay for certain expenses for two government officials from the foreign country to travel to the United States on a five-day trip to Massachusetts, New York, and Washington DC. The trip would include meetings with families and their adopted children and at the Requestor’s offices to learn more about its processes.
The advisory opinion concludes that, based on the facts represented by the Requestor, DOJ does not presently intend to take any enforcement action under the anti-bribery provisions of the FCPA, as the proposed expenses “reflect no corrupt intent . . . and appear to be reasonable and bona fide expenses directly related to ‘the promotion, demonstration, or explanation of [the Requestor’s] products or services’” (quoting 15 U.S.C. § 78dd-2(c)(2)(A)).
Beyond the adoption services context, the representations made by the Requestor provide a helpful reminder of what DOJ will consider when assessing corporate travel expenses for foreign officials under the FCPA’s anti-bribery provisions. The opinion release highlights some key factors, including:
- Legitimate business purpose. The proposed travel expenses for foreign officials were directly related to the legitimate promotion, demonstration, or explanation of the Requestor’s products or services.
- Reasonable value. The Requestor described travel expenses that were reasonable in nature and value for the locations the officials would visit (including economy class airfare, lodging at a mid-range hotel, local transportation, meals, nominal souvenirs, and certain recreational activities, such as a museum or city tour, not to exceed $100 per person in value).
- Payments to vendors. The Requestor represented it would pay costs directly to providers, not to the officials, providing a reliable audit trail for the money expensed.
- Limited recipients. The Requestor would cover expenses only for a limited number of foreign officials participating in business activities and not for their spouses or family members.
- Connection to pending business decisions. Importantly, the Requestor did not have any non-routine business under consideration by the foreign government at the time it proposed the travel.
- Selection of recipients. The relevant government agency, not the Requestor, chose the officials who would travel.
- No additional compensation. The Requestor would not provide anything additional of value to the foreign officials or to the foreign country’s government in connection with the proposed travel.
As the payment of travel- and hospitality-related expenses remains one of the highest areas of FCPA risk for corporate sponsorship and events, global companies should continue to pay particular attention to the specific purpose and format of any proposed sponsored travel with foreign government officials as part of their compliance program controls.
This advisory opinion serves as a helpful reminder of key diligence questions that a company’s legal and compliance department should seek to confirm with their business when reviewing or approving such higher-corruption-risk expenses.
2 See our earlier Legal Update “US Department of Justice Issues Rare Advisory Opinion on FCPA Issue.”