International Regulatory Enforcement (PHIRE)

FCPA Opinion Procedure Release 20-01 – Much Ado About Nothing?

August 18, 2020

Surur Fatema Yonce, Daniel Holman, Tom Best

The U.S. Department of Justice (“DOJ”) posted its first Opinion Procedure Release (“OPR”)[1] since 2014 on Friday, August 14, 2020.  While this release will be of interest to the anti-corruption compliance user community and practitioners, it further demonstrates the limited utility of most OPRs to the general public, and the inherent limitations of the process for companies and individuals making formal opinion requests to the Department. 

The Requestor, which lodged its initial request for an opinion to the DOJ on November 5, 2019, was a multinational investment advisor headquartered in the United States (“Requestor”) seeking to purchase a portfolio of assets from a non-U.S. subsidiary (“Country Office A”) of a non-U.S. state-owned investment bank.   The Requestor succeeded, after a nearly two-year process, in purchasing the assets from Country Office A with the help of a second subsidiary of the same foreign investment bank (“Country Office B”), and a third-party consultant (“Local Partner”). The Requestor represented to DOJ that the services rendered by Country Office B were legitimate and specific. Country Office B then sought a fee from the Requestor as compensation for the work it performed. Requestor had no indications and represented to the Department that the funds involved would not be diverted to any individual; the payment was to the Country Office B entity, and was transparent to its management; the Country Office B Chief Compliance Officer also certified that the payment was made to a Country Office B bank account, and would not be diverted to any other individual or entity bank account, that no “foreign officials” would be influenced by the payment, and that there had been no corrupt offers, promises, or payments of anything of value in connection with the transaction.

As with all OPRs, the question posed by the Requestor was whether, given the facts and circumstances presented to the DOJ and others in the written request the DOJ would seek to initiate an enforcement action. Unsurprisingly given the innocuous facts, the DOJ determined it did not intend to initiate such an action.  The DOJ stated the reason for its conclusion was because “there [was] no information evincing a corrupt intent to offer, promise, or pay anything of value to a ‘foreign official’ in connection with the contemplated payment to the Country B Office” – or, in other words, none of the elements of the FCPA’s anti-bribery offense were met.

This seemingly obvious conclusion begs the question as to why the Requestor sought the DOJ’s advance opinion in the first place.  The process of procuring the OPR was lengthy – requiring multiple rounds of requests for facts by the DOJ and additional submissions by the Requestor.[2]While we can only guess, there may have been facts and circumstances which caused concern to the Requestor – for example, one can imagine concerns that there might have been some unknown relationship between the Local Partner and executives at Country Office B – which made seeking DOJ’s formal sign-off on this payment the logical thing to do from a legal risk-mitigation and business perspective.  Absent unknown circumstances, however, it is hard to see why the Requestor would need the DOJ’s opinion: experienced compliance and enforcement practitioners would have guided the Requestor to the same position regardless.

This OPR also underscores a longstanding limitation on the utility of the OPR process to most companies – the sheer length of time it takes to receive a public response from the DOJ.  Indeed, this one required over nine months to finalize; and while that timeframe may have been acceptable to the Requestor in this context, it is difficult to see how the OPR process – when also taking into consideration the inherent risk of bringing situations with real practical FCPA enforcement risk to the DOJ’s attention – will be and more regularly utilized than it has been over the life of the FCPA to date.

[1] Foreign Corrupt Practices Act Review, Op. Proc. Rel. 20-01, 14 August 2020 available at https://www.justice.gov/criminal-fraud/opinion-procedure-releases

[2] The Requestor made four additional submissions to DOJ over an eight-month period.