In its second Opinion Procedure Release of 2007, the Department of Justice again looked at promotional expenses. An affirmative defense in the U.S. Foreign Corrupt Practices Act allows payment or reimbursement of expenses of foreign officials 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 DOJ said it would take no action against a requestor proposing to cover some U.S. domestic travel and accommodation expenses for six foreign officials. The officials, selected by the foreign government, are attending an annual six-week long internship program for foreign insurance regulators sponsored by the National Association of Insurance Commissioners (“NAIC”). After the NAIC program concludes, the requestor will host the foreign officials for a five-day educational program at the requestor’s U.S. headquarters “to familiarize them with the operation of a United States insurance company.”
The requestor will reimburse air fares (domestic economy class), domestic lodging, local transport, meals and incidental expenses (up to a modest set amount per day upon presentation of a receipt), and “a modest four-hour city sightseeing tour” for the six officials.
“Based on the Requestor’s representations,” the DOJ said, “consistent with the FCPA’s promotional expenses affirmative defense, the expenses contemplated are reasonable under the circumstances and directly relate to ‘the promotion, demonstration, or explanation of [the Requestor’s] products or services.’ 15 U.S.C. § 78dd-2(c)(2)(A).”
The requestor distanced itself from the foreign officials’ influence, and made clear the strict limits of its largess. It represented, among other things, that:
— It will not pay any expenses related to the foreign officials’ travel to or from the United States, or their participation in the NAIC internship program.
— It has no non-routine business under consideration by the relevant foreign government agency.
— Its routine business before the relevant foreign government agency consists primarily of reporting of operational statistics, reviewing the qualifications of additional agents, and onsite inspections of operations. Such routine business is guided by administrative rules with identified standards.
— Its only work with other entities within the foreign government consists of collaboration on insurance-related research, studies, and training.
— It will not select the particular officials who will travel. That decision will be made solely by the foreign government.
— It will host only the designated officials, and not their spouses or family members.
— It intends to pay all costs directly to the providers; in the event that an expense requires reimbursement, the requestor will only do so, up to a modest daily minimum, upon presentation of a written receipt.
— Any souvenirs that it gives the visiting officials would reflect its business and/or logo and would be of nominal value, e.g., shirts or tote bags.
— Apart from the expenses identified above, it will not compensate the foreign government or the officials for their visit, nor will it fund, organize, or host any other entertainment, side trips, or leisure activities for the officials, or provide the officials with any stipend or spending money.
— The training visit will be for a six-day period (five days of training plus travel time), and costs and expenses will be only those necessary and reasonable to educate the visiting officials about the operation of a U.S. company in the requestor’s industry.
View DOJ Opinion Procedure Release No.: 07-02 (September 11, 2007) Here.
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