On January 21, the Department of Justice issued a new Opinion Procedure Release addressing a terrible situation – a company employee faces physical harm or duress in a foreign jurisdiction, and the only way to help them is to pay a bribe. In OPR 22-01, the naval forces of Country A seized a vessel owned by the Requestor (a domestic concern). The vessel had been bound for Country B, but it was directed to wait in international waters for two weeks because the port was fully occupied.
A shipping agent in Country B provided the vessel with incorrect coordinates, leading the vessel to accidentally anchor in Country A’s territorial waters. Country A’s navy intercepted the vessel, and directed it to one of Country A’s ports. While the vessel’s crew remained on board, the captain was arrested and detained in a Country A jail without due process. Unfortunately, the captain suffered from a serious medical condition, and according to the DOJ, “the circumstances and conditions of his detention … created a significant risk to his life and well-being.”
The OPR indicates that the Requestor expended good faith efforts to secure the release of the captain, crew, and ship. It informed the government of Country A of the captain’s ill health. It engaged with “agencies within the U.S. government to end the captain’s detention and permit the Requestor vessel and its crew to leave Country A.” Unfortunately, these efforts were not successful.
In the meantime, the Requestor was contacted by a third party “purporting to act on behalf of the Country A Navy,” who explained that if the Requestor rendered a cash payment of $175,000 to the third party, Country A would release the vessel and her complement.
To engage with the third party, the Requestor turned to a trusted business intermediary with whom it had previously worked and on whom it had recently conducted due diligence. While the third party claimed that the money would be an official payment to Country A, the third-party refused to provide official documentation or receipts. This led the Requestor to conclude, quite wisely, that the payment would, in fact, be a bribe to improperly benefit individual Country A officials. The Requestor, therefore, sought the DOJ’s views via the OPR process, and the agency provided a preliminary response a day later – a record-breaking turn-around time for an OPR, and admirable under the circumstances.
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The DOJ indicated that it would not pursue an enforcement action if the Requestor made the payment in that response. At the time, the DOJ stated that a more fulsome analysis would follow and have more questions for the Requestor. Thus we have OPR 22-01.
The DOJ concluded in the OPR that the payment to the third party would not satisfy the elements of an FCPA violation. First, the agency indicated that there was no evidence of corrupt intent on the part of the Requestor. The company appeared motivated by a sincere desire to help the captain, who was facing a health crisis and potentially losing his life. The DOJ indicated that the situation was consistent with oft-quoted language from the Second Circuit Court of Appeals’ decision in U.S. v. Kozeny: “an individual who is forced to make payment on threat of injury or death would not be liable under the FCPA.”
Second, the DOJ found that the payment did not assist with obtaining or retaining business; in other words, it did not satisfy the FCPA’s “business purpose” test. The DOJ pointed out that “Requestor has no ongoing or anticipated business with Country A, and the entire episode appears to be the result of an error.” The DOJ also distinguished the proposed payment and a situation in which an official demanded a payment “as a price for gaining entry into a market or to obtain a contract.”
At first blush, the OPR is a plain vanilla recitation of the law governing payments made under duress.
But in truth, the DOJ’s analysis raises some significant questions about extorted payments. First, there is no suggestion that officials in Country A acted unlawfully. A common feature of extorted payments is that an official uses their power to do something wrong. Take the example of extortion provided by Congress in 1977: “a payment to an official to keep an oil rig from being dynamited” (Senate Report No. 95-114). In such a circumstance, the underlying threat of harm, and the harm itself, is improper. In OPR 22-01, this does not appear to be the case. We may decry Country A’s treatment of the imprisoned captain – he does not appear to have enjoyed either due process or compassion for his medical condition. But there’s no indication that his treatment was inconsistent with Country A’s laws.
Moreover, there is no suggestion that Country A acted improperly in seizing the vessel. The Requestor’s vessel anchored in Country A’s waters, regardless of whether it did so accidentally.
This leads to an obvious question – how far does the DOJ’s rationale go? There are many countries with laws that we might find objectionable or whose punishments are far more severe than the prevailing norms in the United States. For example, many countries ban the possession or consumption of alcohol. I’ve encountered situations over the years where a client employee has been arrested for public intoxication or for possessing liquor in such a jurisdiction and been whisked off to prison. In some instances, conditions in those prisons were extremely unpleasant. Is this duress? Certainly, the individual in question is unhappy with the situation and may even face risks to their health.
Singapore’s law subjects drug traffickers to the death penalty, a result far more grievous than the likely result in the U.S. criminal justice system. If an employee of a U.S. company was arrested on drug trafficking charges in Singapore, would the U.S. company now be permitted to bribe Singaporean officials for its employee’s release? The unintended implication of OPR 22-01 is that if you don’t like the laws of a particular country or the treatment (or mistreatment) of those who violate local laws, you may bribe to thwart local enforcement. This seems to be a rather forgiving standard, and one that in other situations might give rise to mischief.
The other curious conclusion in the OPR is that the payment in question would not assist the Requestor in obtaining or retaining business. If the payment in question were solely to secure the release of the ailing captain, and even the detained crew, I would agree. But the OPR indicates that throughout the process, the Requestor sought the release of the captain and crew and to get its ship back.
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There’s nothing per se wrong with that – the Requestor obviously wanted the vessel safely returned. But it’s hard to ignore that the payment did not help with the Requestor’s business. Although I am very sympathetic to the captain’s plight, and believe it is reasonable to render payments to secure his release, as well as the release of the crew, I am surprised that the DOJ did not raise concerns about the ancillary, yet significant, benefit of freeing the impounded vessel.
Surely that will assist the Requestor in obtaining or retaining business in the future. I am reminded of the Fifth Circuit’s ruling in Kay & Murphy – there is no need that a bribe directly result in government business; it is enough that a bribe might assist with the ability of the payor to obtain and retain business in the future. Is that not the case with the release of the vessel? This is a surprising take on the business purpose test from an enforcement agency that has consistently put forth an expansive reading of the “obtain and retain business” language for almost two decades. Indeed, I would have expected the DOJ to require the Requestor to bargain, and find out what it had to pay just to get its personnel back.
As a defense attorney who is often called to guide clients through situations like this, I find it refreshing that the OPR shows tolerance for challenging, real-world scenarios. This OPR appears to expand the concept of circumstances constituting duress, while simultaneously espousing a narrower scope of the business purpose test than we typically see from the DOJ. But I urge caution before other companies rely on OPR 22-01 in reshaping their policies and procedures. In my experience, most companies that address extortion in their anti-corruption policies allow payments under duress only to the extent necessary to avoid imminent physical harm.
I recommend that companies continue to maintain such a narrow exception for extorted payments. While on its face the OPR moves the needle on extortion and the business purpose test, it also is possible that the DOJ simply didn’t want to stand in the way of Requestor’s efforts to save an imperiled employee, and engaged in some analytical gymnastics to make that possible, tolerating the Requestor obtaining a significant ancillary business advantage with the return of its ship. Moreover, while OPRs are certainly instructive, the agency rightfully points out that OPRs have no precedential value.