By Andy Liu and Haaleh Katouzian
On January 21, 2022, the Department of Justice (DOJ) released an Opinion letter, responding to an inquiry from a U.S.-based company regarding whether its payment of $175,000 in cash to “a third party purporting to act on behalf of” a foreign government’s Navy would violate the Foreign Corrupt Practices Act (FCPA).
The company (the “Requestor”) attempted to dock its maritime vessel in the port of one country (Country B), but “inadvertently” anchored the vessel in the waters of another country (Country A). Country A’s Navy detained the vessel’s captain in jail without explanation, confiscated the crew’s documents, and prevented the crew and vessel to leave Country A waters. At the time, the captain of the vessel was “suffering from serious medical conditions that would be significantly exacerbated by the circumstances and conditions of his detention and created a significant risk to his life and well-being.” Ultimately, the “third party purporting to act on behalf of . . . Country A[’s] Navy” demanded $175,000 to release the captain and crew and to avoid seizure of Requester’s vessel. Requester requested, but was unable to obtain, an invoice or other documentation setting forth charges or an enumerated fine amount. Requester feared that although the payment was allegedly an official payment to Country A, it would instead go to Country A government official(s). On these facts, DOJ opined that payment of the $175,000 would not be one that was made “corruptly” and 2) would not be made “to obtain or retain business.” The payment would not made corruptly because “the primary reason for the payment was to avoid imminent and potentially serious harm to the captain and the crew of the Requester vessel.” Nor would the payment be made to obtain or retain business because “Requester has no ongoing or anticipated business with Country A, and the entire episode appears to be the result of an error, emanating from the incorrect advice Requester received about where to anchor its ship[.]” DOJ pointed out that Requester didn’t hide with payment and tried to find other ways to release the captain and crew before making the payment (also only doing so when told by Country A that it was “the only way to secure the safe and prompt release of the captain and crew”). The DOJ Opinion Letter, though narrow, illustrates the importance of purpose in determining whether there has been a violation of the FCPA. Download This DocumentDOJ Opinion Letter Sheds Light on the Line Between Payments to Avoid Imminent and Serious Harm to Personnel and Corrupt Payments to Obtain or Retain Business
