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No enforcement action against investment advisor in first FCPA advisory opinion in six years

Financial Crimes FCPA Enforcement DOJ Of Interest to Non-US Persons

Financial Crimes

On August 14, the DOJ issued an FCPA Opinion Procedure Release concluding that a U.S. financial institution’s proposed payment to a foreign government-linked investment bank would not result in an enforcement action. This is the first FCPA advisory opinion issued since 2014. According to the opinion, a U.S.-based multinational financial institution (Requestor) asked the DOJ for guidance on whether its planned conduct would conform with the DOJ’s enforcement policy regarding the FCPA’s anti-bribery provisions. The Requestor explained that it intended to pay a $237,500 fee to a foreign subsidiary of a foreign investment bank that was majority owned by a foreign government, as “compensation for services the [foreign subsidiary] provided during a two-year period in which Requestor sought to and ultimately did acquire a portfolio of assets” from a different foreign subsidiary of the same investment bank. The fee represented 0.5 percent of the face value of the assets, and was intended to compensate the foreign subsidiary for “certain enumerated analytical and advisory tasks it had performed on Requestor’s behalf.”

In response to the request, the DOJ stated that it did not presently intend to take any enforcement action if the fee payment was made, noting that there is “no information evincing a corrupt intent to offer, promise, or pay anything of value to a ‘foreign official.’” For the purposes of review, the DOJ assumed that the foreign subsidiary receiving payment is “an instrumentality of a foreign government” and its employees are considered “foreign officials” as defined by the FCPA. With those assumptions, the DOJ concluded that the facts “do not reflect a corrupt intent to influence a foreign official,” because (i) the payment would be to an office, not an individual; (ii) there was no indication the payment would be diverted to an individual and there were no representations of “corrupt offers, promises, or payments of anything of value”; and (iii) the fee was commercially reasonable in response to “specific, legitimate services.”

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