By Thomas Fox
From a perspective different than previous commenters (here), I’d like to state the case for the value of the defense.
Generally, enforcement actions that discuss promotional expenses — including those Kyle cited in his paper — involve expenses that were neither bona fide nor reasonable as required by the FCPA. The cases include:
Lucent Technologies – $10 million in trips, primarily to vacation destinations in the U.S., including $34,000 for five days of sightseeing, wrapped onto a three day trip of business activity.
Ingersoll Rand – holiday excursion to Florence after visiting the company’s facilities in Vigante, Italy. The excursion to Florence included payment of $1000 in “pocket money”.
Metcalf & Eddy – first-class travel to the U.S. for foreign officials and per diem cash payments equivalent to 150% of estimated daily expenses.
Syncor -the SEC said payments for promotional expenses came “mostly came in the form of sponsorships for the doctors’ attendance at educational seminars, including payments for registration fees, travel, lodging, and meals” but also included “gifts of computer equipment, software, office furniture, and medical supplies to doctors and their hospitals; sponsorships of social functions and fundraisers at the hospitals; funds provided to cover the cost of temporary employees at the hospitals; and payments made for outside testing when a particular hospital’s laboratory equipment was not functioning properly.”
Titan Corporation – there’s a reference to an authorization for a $20,000 payment for promotional travel expenses, with the notation that it was unclear if the payment was made. However this was in the context of at least $2 million paid in bribes to government officials. Even if the $20,000 was not paid, there were other facts on which to base the enforcement action.
I would argue that none of the above enforcement actions involved promotional expenses which were either bona fide or reasonable. Based on the foregoing, I think companies subject to the FCPA have sufficient guidance on what constitutes a bona fide or reasonable promotional expense. I also believe the cases cited in the article can be used as solid teaching points on what is not bona fide or reasonable without having to try and ascertain the intent to corrupt.