When the Foreign Corrupt Practices Act became law in 1977, it ignited suspicions outside Washington that the government was planning a clever ambush, like a central-Florida speed trap, intended to catch unsuspecting business people and their lawyers in felonious conduct overseas.
In part to allay those fears, Congress created a procedure by which anyone subject to the FCPA could ask the Justice Department whether it would prosecute proposed conduct under the antibribery provisions, and receive an answer back in 30 days. The opinion shall state whether or not certain specified prospective conduct would, for purposes of the Department of Justice’s present enforcement policy, violate the preceding provisions of this section. (See 15 U.S.C. § 78dd-1(e) [Section 30A of the Securities & Exchange Act of 1934] and § 78dd-2(f); the FCPA can be viewed here.) A DOJ opinion, the law stipulates, creates “a rebuttable presumption” that the conduct in question complies with the FCPA and with the DOJ’s current enforcement practices.
The FCPA Opinion Procedure Regulations appear in 28 CFR Part 80. They say, among other things, that a request must come from an issuer or domestic concern, must be in writing and must contain all details of the transaction. “The requesting issuer or domestic concern is under an affirmative obligation to make full and true disclosure with respect to the conduct for which an opinion is requested. . . The person signing the request must certify that it contains a true, correct and complete disclosure with respect to the proposed conduct and the circumstances of the conduct.”
Responses from the DOJ are now known as Opinion Procedure Releases. Although not binding on anyone except the requesting parties, and not creating legal precedent in the strict sense for anyone else, Releases are very influential in the world of compliance. The FCPA is seldom litigated, so the Releases are a de facto substitute for judicial interpretation. They don’t have the force of law behind them (except as to requestors), but Releases are cited by practitioners and compliance professionals as “official” guidance from the government. We’re no exception; we rely on Releases all the time, as evidenced by our many posts citing one or more of them (here).
All Opinion Procedure Releases from 1993 to 2008 can be found on the DOJ’s site here. Earlier Releases from 1980 to 1992, then known as Review Procedure Releases, can all be found here.
The first Release to be published, No. 80-01 from October 29, 1980, broke the ice with a touching story. An American law firm asked if it could provide about $10,000 in annual support to two adopted children of a government official in a country where the firm wanted to do business. The official — whose duties were merely ceremonial — was elderly and a semi-invalid. How could the DOJ say no? It couldn’t, of course, and the two lucky kids presumably enjoyed their FCPA-compliant support in the years that followed.
The DOJ’s next Release, No. 80-02, also dated October 29, 1980 (all four Releases from 1980 have the same date), involved a request from Castle & Cooke, Inc. (the folks who turned bananas and pineapples into one of the world’s biggest real estate empires). An employee in a foreign country wanted to run for the local legislature. Could he become an elected official and retain his employment? Yes, said the DOJ. One condition being that the employee would “refrain from participation in any legislative matters or other governmental action which would directly affect the corporation, and his salary [would] be based on the amount of time he actually works for the corporation.” Castle & Cook also had an opinion of local counsel saying the proposed conduct wouldn’t violate local conflict of interest or other laws.
The DOJ’s third Release, No. 80-03, limited the scope of all reviews that would follow. The requestor submitted to the Justice Department a proposed contract to retain an attorney in West Africa. The attorney represented that he was not a foreign official and, using language from the FCPA, agreed not to make prohibited payments to foreign officials. The requestor asked no specific questions — it simply submitted the agreement to the DOJ and waited for a response. No good, said the Justice Department — an answer that still stands today. “In the absence of any reasonable concern about the application of or possible violation of the [FCPA], review of a proposed contract is not an appropriate function of the Review Procedure. The Criminal Division therefore has declined to respond to this Review Request by stating whether or not it will take an enforcement action.”
The DOJ’s final Release of maiden year 1980 is No. 80-04. Under the old rules for requests, the names of parties were often revealed. This one talked about a proposed partnership between the Lockheed Corporation and the Olayan Group. Lockheed was well-known in 1980, of course, as an important military contractor but also as one of the companies whose notorious overseas bribery helped spur enactment of the FCPA in the first place. The other party named in the request, the Olayan Group, was then one of the most prominent and respected diversified businesses in Saudi Arabia. Its founder was Suliman S. Olayan (1918 – 2002) , who by 1980 was a legendary businessman in Arabia and the region.
The details of Release No. 80-04– dealing with Mr. Olayan’s representation of Lockheed, notwithstanding his directorship in state-owned airline Saudia — were far less important than the headline-grabbing presence of Lockheed and Mr. Olayan themselves. Their public appearance helped put the commercial world’s stamp of approval on the DOJ’s FCPA review procedure, and brought a new level of awareness in 1980 to the importance of the still-new phenomenon of FCPA compliance.
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