As background, the FCPA Opinion Procedure Regulations at 28 CFR Part 80 say any issuer or domestic concern can ask the Justice Department whether a proposed transaction would violate the FCPA. Responses from the DOJ are called Opinion Procedure Releases. They create “a rebuttable presumption” that the conduct in question complies with the FCPA and with the DOJ’s current enforcement practices.
Although not binding on anyone except the requesting parties, and not creating legal precedent in the strict sense for anyone else, Releases matter. There’s not much FCPA-related litigation, so they’re a de facto substitute for judicial interpretation. Releases don’t have the force of law (except as to requestors) but they’re relied on by practitioners and compliance professionals all the time.
So Releases are important. They’re also rare. Since 1993, there was only one year with four Releases — 2004. There were four years with three Releases, six years with two Releases, two years with one Release, and three years with none — 1999, 2002, and 2005. That’s 28 Releases in 16 years — an average of less than two per year. So a twelve-month gap between Releases isn’t earth-shaking.
On the other hand, two of last year’s Releases caused us some alarm. Here’s why.
Release 08-01 was the longest on record — 13 pages. The requestor wanted to know whether its investment in a privatization deal would be compliant. The problem was the presence of a co-investor who was presumed to be a “foreign official.” The DOJ gave its blessing. But in doing so, it published what appeared to be all the details provided by the requestor. No names were mentioned but anyone involved would easily recognize themselves.
Last year’s second Release, 08-02, was worse. Halliburton was fighting to buy British firm Expro through a hostile takeover. Another group of investors called Umbrellastream was also in the hunt. Halliburton’s problem was that it couldn’t do any real due diligence until after the acquisition. So if it bought Expro, it might end up with a subsidiary riddled with past and ongoing compliance problems.
To protect itself, Halliburton asked the DOJ for a green light, which it got. But in return it promised to dig deep into Expro after the acquisition, and to disclose what it learned to the DOJ. And not just that. It also promised to help the DOJ prosecute anyone at Expro who might be involved in FCPA offenses. Facing that kind of threat, it surprised no one when Expro landed in the lap of Umbrellastream instead of Halliburton.
Did the two Releases scare would-be requestors? Did all that public disclosure make a difference in the marketplace? Could a new reluctance be behind the hiatus in opinion requests? We don’t know the answers but we have our suspicions. And we’ll welcome hearing what our readers think.
All Releases since 1993 can be found here.