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Harry Cassin
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Eric Carlson
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Are DOJ opinion procedure releases headed for extinction?

This could be the first year since 2005 when the DOJ won’t issue any FCPA Opinion Procedure Releases.

There have never been a lot FCPA releases — just 61 since 1980, an average of less than two per year. Even in the busiest year for releases, 2004, the DOJ issued just four of them.

Here are a few reasons why there aren’t many releases, and why new DOJ advisory opinions may soon disappear completely.

First, some background.

Congress directed the DOJ to give advisory opinions to issuers and domestic concerns that asked, as a way to help small and medium-sized businesses comply with the FCPA. Before 1993 the opinions were called Review Procedure Releases; from 1993 onward they’ve been called Opinion Procedure Releases.

The Opinion Procedure Regulations require requestors to give the DOJ all the relevant facts. The requestor then says: Based on those facts, if we do this and that, will you prosecute us? The DOJ’s answer becomes the release.

Issuers don’t litigate the FCPA, so the releases are an important substitute for judicial interpretation. Releases don’t have the force of law behind them (except as to requestors) but practitioners and compliance professionals rely on them as official guidance from the government.

*     *     *

OK then. Why have so few requestors come forward over the years? And why might new releases become even more rare?

First reason: Company lawyers don’t like the process or the product.

Asking the DOJ for an FCPA advisory opinion, the thinking goes, is like having elective surgery. You don’t really need it, and the outcome might kill you.

Company lawyers worry that if they raise a thorny FCPA issue in an opinion request, the DOJ might react badly and become aggressive. There are also concerns the DOJ might somehow stumble upon another FCPA problem and investigate or prosecute the company. Maybe the DOJ will keep the company on some kind of FCPA watch list, with bad consequences down the road. These scenarios might be far fetched, and there’s no evidence any of them have ever happened. But for company lawyers, concerns about them are real.

Then there’s the end product — advisory opinions from the DOJ are released to the public. The requestor usually isn’t named. But enough clues appear in most releases to guess who the requestor is.

That becomes a problem when requestors set out facts about potential relationships with overseas partners and agents — see, e.g. brothers-in-law of potentates. The damage to a relationship can be permanent.

The second reason why DOJ advisory opinions aren’t more sought after can be summed up in one word: Halliburton.

In 2008, the Texas-based oil and gas services firm wanted to acquire UK-based Expro. Because the takeover would be hostile, Halliburton couldn’t do meaningful due diligence about Expro’s past compliance until after the acquisition.

Opinion Procedure Release 08-02, published in November 2008, named Halliburton as the requestor. The company asked the DOJ if it could escape potential successor liability for Expro’s past non-compliance.

The DOJ said yes. But in exchange, Halliburton would have do a full blown investigation after the acquisition and give the DOJ any evidence of Expro’s FCPA-type offenses committed before the hostile takeover (and perhaps before anyone at Expro even knew about their responsibilities under the FCPA).

The DOJ’s tone in Release 08-02 was . . . off. The feds seemed to be forcing Halliburton into a deputized law enforcement role and setting an FCPA trap for Expro and its directors and officers.

After the DOJ published Release 08-02, Expro found a UK white knight called Umbrellastream to outbid Halliburton.

Since the Halliburton release in 2008, one other company has asked the DOJ for an FCPA opinion about a potential acquisition. In Release 14-02, published in November 2014, the DOJ talked about the boundaries around successor liaiblity. The tone was neutral and probably intended to be reassuring. But there hasn’t been another FCPA release on any FCPA topic since then.

The third reason new DOJ advisory opinions may disappear is because there are already enough old ones.

Thirty-five years after the first DOJ advisory opinion, there are now 61 releases. That’s not many releases per year. But together they make up an impressive body of quasi-law to guide FCPA practitioners and company lawyers.

On the topic of gifts, entertainment, and travel, there are 15 releases. Third-party agents? There are 16 existing opinions. What are reasonable, bona fide expenses? Guidance appears in 10 releases.

Audit rights, charitable contributions, due diligence, payments to foreign governments, hiring a foreign official, joint ventures, mergers and acquisitions — they’re all covered by old releases, plus a lot more topics.

Those old releases are easy to research and can help anyone understand a current FCPA issue. They don’t create a “rebuttable presumption” for anyone except the original requestors. But they are decades of precedent that lawyers can use.

If an answer isn’t in the old releases, maybe it’s in the FCPA Resource Guilde. The DOJ and SEC published it in 2012. It collates most of the releases and FCPA-related court decisions in a 120-page narrative. With the guidance, which is really another form of non-binding but influential precedent, there’s even less reason to ask the DOJ for a new advisory opinion.


Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

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