Skip to content


Harry Cassin
Publisher and Editor

Andy Spalding
Senior Editor

Jessica Tillipman
Senior Editor

Bill Steinman
Senior Editor

Richard L. Cassin
Editor at Large

Elizabeth K. Spahn
Editor Emeritus

Cody Worthington
Contributing Editor

Julie DiMauro
Contributing Editor

Thomas Fox
Contributing Editor

Marc Alain Bohn
Contributing Editor

Bill Waite
Contributing Editor

Russell A. Stamets
Contributing Editor

Richard Bistrong
Contributing Editor

Eric Carlson
Contributing Editor

Buyers Face An Impossible Choice

A few years ago, Halliburton — no stranger to FCPA compliance problems — was fighting to buy British firm Expro through a hostile takeover. Another group called Umbrellastream was also in the hunt. Halliburton 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 compliance problems, for which it could face successor liability.

To protect itself, Halliburton asked the DOJ for a green light under the FCPA Opinion Procedure Regulations. The green light came in the form of Opinion Procedure Release 08-02. But it didn’t come cheap.

Halliburton had to promise to investigate Expro after the acquisition and quickly disclose to the DOJ what it learned. And it had to help prosecute anyone at Expro who might have been involved in FCPA-type offenses that happened before the hostile takeover.

DOJ Opinion Releases are available to the public, who in this case included Expro’s executives. After reading such a threatening scenario, they ran from Halliburton and into the arms of Umbrellastream.

Halliburton’s experience was discouraging for anyone with an acquisition program and a desire to comply with the FCPA. But there was even more bad news.

The DOJ’s last words in Release 08-02 warned companies not to sign confidentiality agreements that might prevent them from disclosing pre-acquisition information to U.S. prosecutors. It said:

While the Department accepts the representation that in order to be a viable bidder for Target, Halliburton had to enter into the confidentiality agreement, the Department discourages companies wishing to receive an FCPA Opinion Release in the future from entering into agreements which limit the information that may be provided to the Department.

Since the publication of Release 08-02, acquiring companies have faced an impossible choice. They can either sign confidentiality agreements that are customary in acquisitions. Or they can refuse to do that and probably lose all access to the target but thereby preserve the chance to seek an FCPA opinion from the DOJ.

Congress ordered the DOJ to help companies comply with the FCPA by giving them advisory opinions. The FCPA Opinion Procedure Regulations at 28 CFR Part 80 say any issuer or domestic concern has the legal right to ask the Justice Department whether a proposed transaction would violate the FCPA. Affirmative responses from the DOJ — the Opinion Procedure Releases — create “a rebuttable presumption” that the conduct in question complies with the FCPA and current DOJ enforcement practices.

But by forcing acquiring companies to pick between customary confidentiality undertakings or access to a DOJ opinion release, who’s being helped?

Share this post



  1. Who owns Umbrellastream? Which nation has jurisdiction to investigate Umbrellastream? The idea is that enforcement competition and cooperation between OECD Anti-Bribery Convention member states will prevent this type of forum shopping by less than scrupulous companies, which will level the playing field for ethical business competitors.
    Elizabeth Spahn

  2. Umbrellastream is a Candover-led consortium also comprising Goldman Sachs and Alpinvest. — the editors.

  3. Thanks. So U.K. and U.S. both have jurisdiction? Why would a soon -to- be- acquired company with potential problems prefer one U.K. / U.S. listed corporation over another in terms of trying to avoid successor liability-based investigations?

  4. Just a matter of different risk appetites, I'd suggest. Acquirer A wants comfort in the form of an Opinion Release; Acquirer B doesn't need that. Target company requires the comfort of a confidentiality agreement, and sacrifices the extra dollars an 'auction' might have generated in order to stay within its (or its owners'/directors') risk parameters. Nothing especially untoward here – Expro has probably engaged in some form of corrupt activity if anyone chose to look hard enough, but Acquirer B(Umbrellastream) is willing to chance its arm on its own assessment of the likelihood of investigation and/or prosecution.

Comments are closed for this article!