DOJ Issues FCPA Opinion Addressing “Highly Unusual” Circumstances

The FCPA Opinion Procedure

The FCPA Opinion Procedure enables issuers and domestic concerns to obtain an opinion from the DOJ regarding whether certain specified, prospective — not hypothetical — conduct conforms with the DOJ’s FCPA enforcement policy. Each request for an opinion must be accompanied by all relevant information and documents and signed by a senior corporate officer (and, at times, the chief executive officer) with operational responsibility for the conduct that is the subject of the request, certifying that it is a correct and complete disclosure. The DOJ may request additional information and/or documents within 30 days of receiving the request and will issue an opinion within 30 days of receiving all relevant materials.

The Recent Opinion

The issue arose from the detention by the naval forces of Country A of the captain and crew of a maritime vessel owned by the Requestor. The Requestor’s shipping agent had given the vessel’s captain incorrect anchoring coordinates, which led the captain inadvertently to anchor the vessel in Country A’s waters. The Country A Navy intercepted the vessel and detained the captain without providing any documentation authorizing his detention. The captain suffered from serious medical conditions significantly exacerbated by the conditions of his detention, which created a significant risk to his life and well-being. Shortly after the captain was detained, a third-party intermediary, purporting to act on behalf of the Country A Navy, demanded from the Requestor a cash payment of $175,000 to release the captain and the vessel but refused to provide a formal basis for the payment, such as a penalty pursuant to a legal or regulatory violation. Concerned about this payment, the Requestor sought an opinion from the DOJ as to whether it would bring an enforcement action under the FCPA’s anti-bribery provisions were the Requestor to make the payment.

Based on the facts presented by the Requestor, the DOJ opined that the proposed payment would not trigger an enforcement action because the Requestor would not be making the payment (i) “corruptly” or (ii) to “obtain or retain business.” Generally, “[s]ituations involving extortion or duress will not give rise to FCPA liability because a payment made in response to true extortionate demands under imminent threat of physical harm cannot be said to have been made with corrupt intent or for the purpose of obtaining or retaining business.” Here, the primary reason for the payment was to avoid imminent and potentially serious harm to the captain and the crew of the Requestor vessel. Further, the payment was not motivated by an intent to obtain or retain business, as the Requestor had no ongoing or anticipated business with Country A and the entire episode appeared to be the result of a mistake by the Requestor’s shipping agent.

Preliminary Opinion

The initial request was submitted on October 19 and 20, 2021. In light of the unusual and exigent circumstances presented, including the risk of imminent harm to the health and well-being of the vessel’s captain, the DOJ provided the Requestor with a short preliminary opinion a day later, on October 21, 2021, indicating that it did not presently intend to bring an enforcement action in response to the proposed payment. The DOJ later issued a full response on January 21, 2022.

Limited Applicability

The DOJ noted that this situation is readily distinguishable from other situations in which a company is merely threatened with severe economic or financial consequences in the absence of a payment. For example, “[t]he defense that the payment was demanded on the part of a government official as a price for gaining entry into a market or to obtain a contract would not suffice since at some point the U.S. company would make a conscious decision whether or not to pay a bribe.” In that case, a payment could be made “corruptly” in order to “obtain or retain business.”

Challenges in Seeking FCPA Opinion

FCPA opinions are infrequently pursued for several reasons. First, the process can be burdensome and the benefits uncertain. It can be costly and time-consuming to submit an initial request to the DOJ and comply with any requests for supplemental information. At the same time, the timeline for obtaining an opinion can be uncertain. In the instant case, the exigent circumstances led the DOJ to issue an immediate preliminary opinion. While this was real-time feedback from the government, it is not the norm. For example, the previous opinion, released on August 14, 2020, was first requested in November 2019 (taking approximately nine months, with the Requestor providing supplemental information in January, February, June, and July 2020). Even in this instance, this relatively straightforward opinion took three months.

Second, opinions are public and the DOJ retains the right to issue, at its discretion, a release describing the identity of the requestor, the foreign country in question, the general fact pattern, and the action taken by the DOJ in response. In practice, the DOJ appears to take care not to identify requestors by name or publish other potentially identifying information in its opinions, and requestors may ask that any release not disclose proprietary information. Nevertheless, putative requestors may be hesitant to reveal any information that could potentially become public.

Third, if the opinion is unfavorable, the requestor has no opportunity to challenge it other than to ignore it and proceed with the proposed conduct. Last, companies may perceive increased legal risk from voluntary self-disclosure of the relevant facts, which could theoretically lead to a costly enforcement inquiry if they proceed with the conduct.

Though the DOJ views FCPA opinion process as an important but underutilized tool, it may be best limited to cases where a company wants to seek additional comfort. When considering requesting an opinion, it is important to consult with outside anti-corruption counsel to ensure that all potential benefits and consequences are fully considered and evaluated.