On April 19, 2010, the Department of Justice (DOJ) released its first Foreign Corrupt Practices Act (FCPA) Opinion Procedure Release of 2010 (the Opinion), in which it stated that it does not presently intend to take any enforcement action against a United States company (the “Requestor”) that hired a “foreign official” pursuant to an agreement with a U.S. Government Agency.1

The relevant facts noted in the Opinion are as follows:

1. A U.S. Government Agency agreed to furnish assistance to a foreign country (the Foreign Country).

2. The U.S. Government Agency subsequently entered into a contract with the Requestor to design, develop, and construct a facility in the Foreign Country (the Facility), and to hire and compensate individuals to work at the Facility as directed by the U.S. Government Agency.

3. After receiving instructions from the Foreign Country, the US Government Agency directed the Requestor to hire a paid officer of an agency of the Foreign Country (the “Individual”) for the position of Facility Director.

4. Subsequently, the Requestor engaged a subcontractor who entered into a “proposed service contract” with the Individual requiring the Individual to provide services as directed by the Foreign Country for one year in exchange for compensation of $5000 per month.

Focusing on the fact that (1) the Individual “is being hired pursuant to an agreement between the U.S. Government Agency and the Foreign Country, and (2) the Individual “will not be in a position to influence any act or decision affecting the Requestor,” the DOJ determined that “the Individual will have no decision-making authority over matters affecting the Requestor.” Accordingly, the DOJ found that the Individual’s hiring would not give rise to a FCPA enforcement action.

Companies entering into contracts with foreign governments, however, should be aware of the limited reach of this opinion. As the DOJ points out, the Requestor hired the Individual pursuant to an agreement between the US Government Agency and the Foreign Country, not an agreement between the Foreign Country and the Requestor. Moreover, the Foreign Country, not the Requestor, selected the Individual. Perhaps most importantly, however, the Individual will not “perform any services on behalf of, or make any decisions affecting, the Requestor.” All of these facts indicate that the Requestor’s hiring and subsequent payment of the Individual are not for the purpose of “(i) influencing any act or decision . . . in his official capacity, (ii) inducing [him] to do or omit to do any act in violation of [his] lawful duty, or (iii) securing any improper advantage” as required to establish a violation of the FCPA. The DOJ, however, could easily characterize a payment made outside of these extremely narrow circumstances as a payment to a government official made for an improper or corrupt purpose.

For further information regarding the FCPA or other anticorruption matters please contact the Arent Fox attorney with whom you work or a member of Arent Fox’s International Trade, White Collar or Securities Practice Groups.

Peter V. B. Unger
unger.peter@arentfox.com
202.857.6220

Andrew D. Kaizer
kaizer.andrew@arentfox.com
212.484.3977

Mary Carter Andrues
andrues.mary@arentfox.com
213.443.7574

Amal Dave
dave.amal@arentfox.com
202.857.6336

1 http://www.justice.gov/criminal/fraud/fcpa/opinion/2010/1001.pdf