Key Takeaways

In the discussion below, we highlight the following notable observations from the OPR:

• DOJ concluded that the company’s proposed payment would not trigger an enforcement action under the FCPA’s anti-bribery provisions because the proposed payment: (1) was not made with corrupt intent and (2) was not made to obtain or retain business.
• The OPR reiterated that the term “corrupt intent” connotes a payment made with the intent to influence the recipient to do something contrary to their official duties.
• DOJ confirmed that “‘an individual who is forced to make payment on threat of injury or death would not be liable under the FCPA’” because “‘[f]ederal criminal law provides that actions taken under duress do not ordinarily constitute crimes.” Conversely, a demand or extortion for payment when a company is threatened by economic or financial consequences could result in liability under the FCPA.
• Companies that find themselves in a similar scenario where the nature and manner of the payment raises concern should consider taking steps to conduct due diligence and be transparent with DOJ regarding the proposed payment, which includes providing all relevant and material information regarding the purpose of the payment.

Background

The U.S. DOJ’s FCPA Opinion process allows issues and domestic concerns to submit information related to “specified, prospective – not hypothetical – conduct”¹ and receive an opinion from the DOJ regarding whether the proposed conduct would be prosecuted under the FCPA. Because FCPA Opinion Releases relate to specific complex circumstances, they should typically be interpreted narrowly.

Introduction

On January 21, 2022, DOJ issued a brief but instructive Opinion Procedure Release (the “OPR”)—only the second FCPA opinion released since 2014—addressing a unique scenario where a company employee faces imminent physical harm or duress in a foreign jurisdiction, and the company faces a demand for payment to a third party acting on behalf of that foreign jurisdiction in order for the employee to be released.

In October 2021, a U.S.-based company submitted to DOJ an application requesting DOJ’s opinion regarding whether it would commence an enforcement action if the company made a significant cash payment to a third-party intermediary of a foreign government official in order to protect the life and safety of one of its employees. The company was the owner of a maritime vessel that was detained by the navy of an unnamed foreign country after it inadvertently anchored in the foreign country’s territorial waters. While the crew was allowed to remain on the ship, the captain of the ship was jailed. The company indicated in its request to DOJ that because the captain had serious medical conditions, his continued detention without medical treatment created an immediate threat of serious physical harm.

After multiple unsuccessful attempts for U.S. government intervention to end the captain’s detention, the company was contacted by a third party purporting to represent the foreign country’s navy, who explained that it could secure the release of the captain and the ship in exchange for a US$175,000 cash payment. Although the third party claimed that the money would be an official payment to the country, it refused to provide official documentation or receipts.

Because the nature of the request led the company to conclude that the money would most likely be directed to government officials rather than the unnamed country itself, the company submitted the emergency request for an opinion to DOJ. Due to the “highly unusual and exigent circumstances”² involving the possibility of harm, DOJ acted quickly, issuing a short but expedited opinion within two days of the company’s request and subsequently issued a full response and opinion last month.

OPR's Analysis

In the OPR, DOJ concluded that the U.S. company’s payment to the third-party intermediary would not satisfy the “corrupt intent” element of the FCPA because the proposed payment was neither intended to wrongfully influence the recipient nor was it made to assist the company in obtaining a business advantage.

DOJ noted that the term “corruptly” means an “intent or desire to wrongfully influence the recipient”.³ Thus, the OPR first concluded that there was no corrupt intent on the company’s part because the primary reason for the payment “was to avoid imminent and potentially serious harm” to the employees. Conversely, DOJ noted that under federal criminal law, actions taken under duress (i.e., under threat of injury or death) do not ordinarily constitute crimes and thus do not form the requisite corrupt intent.

The OPR also concluded that the payment did not satisfy the FCPA’s “business purpose” test because making the payment did not assist the company in obtaining or retaining business. DOJ reiterated that the FCPA’s business purpose test is met where “the primary purpose of the payment or offer is to assist in obtaining and retaining business.”⁴ DOJ also noted that the company did not have any business with the unnamed country; emphasizing that the situation appeared “to be the result of an error”⁵ because the vessel had received incorrect coordinates leading it to accidentally anchor in the foreign country’s waters.

Notably, DOJ distinguished a demand for payment in a situation where there is an imminent threat of serious bodily harm or death, from a demand for payment associated with threats of severe economic or financial consequences, such as when a foreign official demands payment “as a price for gaining entry into a market or to obtain a contract.”⁶ DOJ noted that in the latter scenario, the company is making a conscious decision to pay or not to pay, and as such any payment could give rise to liability under the FCPA.

DOJ also indicated that the company’s transparency regarding the proposed payment and its purpose undermined any suggestion of corrupt intent, citing the fact that the company made no attempt to conceal the payment, made efforts to determine the legal basis for the payment request, and requested proper documentation from the foreign country to support its request. Thus, the company’s conduct represents what DOJ considers to be a best practice for companies that face similar situations where the nature and manner of a payment is ambiguous or raises FCPA concerns; coming forward with all relevant and material information about the purpose of the payment could avoid future enforcement actions.

Although DOJ, in the OPR, indicated that it considered the demand for a sizeable cash payment in exchange for the unnamed country’s release of its captain a situation akin to “extortion” or “duress” without regard to whether the unnamed foreign country acted illegally, or even improperly, in seizing the company’s vessel and detaining the captain. Thus, it remains unclear whether DOJ would have taken the same position if it was clear that the unnamed country was acting in accordance with its own laws, if the captain did not have a serious medical condition, or if the company proposed the payment rather than being the receiver of the request.

Footnotes

1) 28 CFR Section 80.1

2) DOJ Opinion Procedure Release at n.1.

3) Id. at 2-3.

4) Id. at 3.

5) Id.

6) Id. at 4.