First DOJ FCPA Opinion Procedure Release in 2010

First DOJ FCPA Opinion Procedure Release in 2010

On April 19, 2010, the Department of Justice issued its first opinion procedure release of 2010, declaring that a U.S. company would not violate the FCPA if the company engaged a foreign government official for services rendered to the company.1 Opinion procedure releases
are issued in response to a request from a company seeking to ascertain whether specified prospective conduct would violate the FCPA.2 Opinion procedure releases from the DOJ are only binding on the requesting party and the DOJ, but can provide useful guidance to other companies and their counsel on what conduct the DOJ considers a breach of the FCPA.3

The opinion request was submitted by a U.S. company ("Requestor") that was selected by a U.S. government agency to design, develop, and construct a facility ("the Facility") in a foreign country.4 Under the contract, the company was required to engage and compensate individuals to work at the Facility. The U.S. government agency had an agreement with the foreign government, pursuant to which the U.S. provided assistance to the foreign country, which included the development of the Facility. The foreign country informed the U.S. government agency that it had appointed an individual to be the director of the Facility, and was in the process of selecting other individuals to fill other positions at the Facility. The U.S. government agency then directed the Requestor to engage the individual selected by the foreign country to be the Facility Director.

As a result, the Requestor directed its subcontractor to engage and pay personnel at the Facility. Through its local subsidiary, the subcontractor entered into a proposed, one-year service contract with the Facility Director designated by the foreign government. The contract provided the Facility Director compensation of $5,000 per month to provide services as directed by the foreign country. The U.S. government agency and the foreign government anticipated that the Facility Director would be paid directly by the foreign government at the conclusion of the one-year contract.

The Requestor was concerned that it could be subjected to potential liability under the FCPA because the proposed Facility Director's was a government official of the foreign government. The Requestor indicated, however, that the Facility Director's responsibilities as an official of the government did not relate to the Facility, and the services to be performed under the contract would be "separate and apart" from his or her responsibilities as a government official. Moreover, the Facility Director would not perform any services on behalf of, or make any decisions affecting, the Requestor company, either as the Facility Director or in his or her role as a foreign official, and the Requestor would not provide any direction to the Facility Director.

Based on these facts, the DOJ stated that it did not intend to take any enforcement action with respect to the proposed service contract, notwithstanding the fact that the Facility Director was a "foreign official" within the meaning of the FCPA and would be receiving compensation from the Requestor (albeit indirectly, through a subcontractor). The DOJ based its conclusion on the existing contractual obligation of the Requestor to perform as directed by the U.S. government. Moreover, the Facility Director would be engaged by Requestor's subcontractor pursuant to an agreement between the U.S. government agency and the foreign country's government.

In addition, the DOJ noted that the Requestor did not play any role in selecting the Facility Director, and that the Facility Director's position would be separate and apart from his or her position as a foreign official. The DOJ considered such other factors as the fact that the Facility Director would not perform any services on behalf of, or receive any direction from, the Requestor, nor would the Facility Director have any decision-making authority over matters affecting the Requestor, "including procurement and contracting decisions."5

1 Fraud Section, U.S. Dep't of Justice, FCPA Opinion Procedure Release, No. 10-01 (Apr. 19, 2010), available at http://www.justice.gov/criminal/fraud/fcpa/opinion/2010/1001.pdf.
2 Christopher M. Matthews, DOJ Pens First FCPA Opinion Procedure Release of 2010, MAIN JUSTICE, Apr. 22, 2010, available at http://www.mainjustice.com/2010/04/22/doj-pens-first-fcpa-opinion-procedure-release-of-2010/.
3 Id.
4 FCPA Opinion Procedure Release, No. 10-01.
5 Id.

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