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Harry Cassin
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Bill Waite
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Hospitality, FCPA Style

The FCPA’s promotional expenses affirmative defense is used as a basis to pay for overseas trips by foreign officials. It allows payment or reimbursement of expenses that are directly related to “the promotion, demonstration, or explanation of products or services.” 15 U.S.C. §§ 78dd-1(c)(2)(A) and 78dd-2(c)(2)(A).

The Department of Justice’s Opinion Procedure Release 07-01 (July 24, 2007) mentioned earlier is the latest word on the subject. To fit snugly within the affirmative defense, the requestor included representations that are themselves accreted from prior Releases.

The requestor represented, among other things, that:

· it does not currently conduct operations in the foreign country or with the foreign government, although it is interested in pursuing such opportunities in the future;

· it has obtained written assurance, a copy of which has been provided to the Department of Justice, from an established law firm with offices in both the U.S. and the foreign country that the requestor’s sponsorship of the visit and its payment of the expenses described in the request is not contrary to the law of the foreign country;

· it did not select the delegates who will participate in the visit; rather, the foreign government selected the delegates;

· to the requestor’s knowledge, the delegates have no direct authority over decisions relating to potential contracts or licenses necessary for operating in the foreign country;

· it will host only officials working for the relevant foreign ministries and one private government consultant;

· it intends to pay all costs directly to the providers; no funds will be paid directly to the foreign government or the delegates;

· it will not pay any expenses for spouses, family, or other guests of the officials;

· any souvenirs that the requestor may provide to the delegates would reflect the requestor’s name and/or logo and would be of nominal value;

· apart from meals and receptions connected to meetings, speakers, or events the requestor is planning for the officials, it will not fund, organize, or host any entertainment or leisure activities for the officials, nor will it provide the officials with any stipend or spending money; and

· all costs and expenses incurred by the requestor in connection with the visit will be properly and accurately recorded in the requestor’s books and records.

Requestors typically present ultra-safe scenarios, as in the case here.

Which will leave would-be hosts of foreign officials wondering if they can really follow the de facto guidelines without offending their guests.

View Opinion Procedure Release 07-01 here.

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