The Department recently issued two new Opinion Procedure Releases which serve as useful guidance in determining whether promotional expenses are “reasonable and bona fide.” The proposed expenses in both Procedure Releases involved a trip to the United States by officials of a foreign government for “educational” and “promotional” programs. The programs were intended to familiarize the foreign officials with the nature and extent of the requestor’s U.S. operations and capabilities. In announcing that it had no present enforcement intentions based upon the facts presented by the requestors, the Department noted several factors common to both opinions: (a) the foreign government, not the requestor, was selecting the officials who were to participate in the trip; (b) the requestor either did not operate in the country whose officials were invited or did not have any nonroutine business under consideration by the agencies that employed the officials; (c) the proposed expenses were limited to those incurred by the officials (and did not involve family members or other guests) and were only for domestic economy class travel (with the foreign government paying the cost of international travel), reasonable domestic lodging, local transport and meals; (d) proposed gifts or entertainment were of nominal value and all gifts would bear the requestor company logo; and (e) all costs were to be paid directly to the providers, and no funds paid directly to the foreign government or officials.
Foreign Corrupt Practices Act Opinion Procedure Release 07-0135
The first Opinion Procedure Release involves a company that proposed to pay for expenses related to the domestic portion of a trip to the United States by a six-person delegation of the government of an Asian country for an educational and promotional tour of one of the requestor’s U.S. operations sites. The stated purpose of the visit was to familiarize the delegates with the nature and extent of the requestor’s operations and capabilities and to help establish the requestor’s business credibility. The requestor expressed an interest in participating in future operations in the foreign country similar to those it conducts in the United States. The proposed visit would be for four days and would be limited to domestic economy class travel to one U.S. operations site. The requestor also proposed to pay for the domestic lodging, local transport, and meals for the six officials.
The requestor also represented, among other things, that:
- It did not currently conduct business or operate in the foreign country or with the foreign government, although it was interested in pursuing such opportunities in the future.
- It had obtained written assurance, a copy of which was provided to the Department, from an established law firm with offices in the United States and the foreign country that the requestor’s sponsorship of the visit and its payment of the proposed domestic expenses was not contrary to the law of the foreign country.
- It did not select the delegates who would participate in the visit; rather, the foreign government had done so.
- To the requestor’s knowledge, the delegates did not have any direct authority over decisions to award potential contracts or licenses necessary for operating in the foreign country.
- It would host only officials working for the relevant foreign ministries and one private government consultant.
- It proposed to pay all costs directly to the service providers and no funds directly to the foreign government or the delegates.
- It would not pay expenses for any spouses, family member or other guests of the officials.
- Any souvenirs that the requestor intended to provide to the delegates would reflect the requestor’s name and/or logo and would be of nominal value.
- Apart from meals and receptions connected to meetings, speakers, or events the requestor was planning for the officials, it would not fund, organize, or host any entertainment or leisure activities for the officials, nor would it provide the officials with any stipend or spending money.
- All costs and expenses incurred by the requestor in connection with the visit would be properly and accurately recorded in the requestor’s books and records.
Based upon the above facts and circumstances represented by the requestor, the Department stated that it did “not presently intend to take any enforcement action with respect to the proposal described in this request,” because the expenses contemplated were reasonable under the circumstances and directly related to “the promotion, demonstration, or explanation of [the requestor’s] products or services.” See 15 U.S.C. §§ 78dd-1(c)(2)(A) and 78dd-2(c)(2)(A).
Foreign Corrupt Practices Act Opinion Procedure Release 07-0236
The second Opinion Procedure Release was submitted by a U.S. insurance company and proposed to pay certain domestic expenses for a trip within the United States by approximately six junior to mid-level officials of a foreign government for an educational program at the requestor’s U.S. headquarters. The six officials had been selected by the foreign government, without the involvement of the requestor, to attend an annual six-week long internship program for foreign insurance regulators sponsored by the National Association of Insurance Commissioners (“NAIC”). After the conclusion of the NAIC program, the requestor proposed to present an “educational program” to these foreign officials at the requestor’s U.S. headquarters.
The purpose of the trip to the requestor’s facilities was to familiarize the officials with the operation of a US insurance company. The requestor represented that it did not have any “non-routine business” pending before the foreign government agency that employed these officials. The proposed training program was intended to be for six days, including travel time. The requestor proposed to pay only for air travel within the United States, in economy class, directly to the requestor’s U.S. headquarters. The requestor also proposed to pay for the domestic lodging, local transport, meals and incidental expenses (up to a “modest” set amount per day upon presentation of a receipt), and a “modest” four-hour city sightseeing tour. The requestor further represented that:
- It would not pay any expenses related to the foreign officials’ travel to or from the United States or their participation in the NAIC internship program.
- It did not have any “non-routine business” under consideration by the relevant foreign government agency.
- Its routine business before the foreign government agency that employed the guests consisted primarily of reporting of operational statistics, reviewing the qualifications of additional agents, and onsite inspections of operations, that was controlled by administrative rules with identified standards.
- Its only work with other entities within the foreign government consisted of collaboration on insurance-related research, studies, and training.
- It had not selected the particular officials who were going to attend the sessions; that had been done solely by the foreign government.
- It proposed to host only the government officials and not their family members.
- It intended to pay all costs directly to the service providers; but that in the event that an expense required reimbursement, it would only do so up to a modest sum after presentation of a written receipt.
- Any souvenir that was provided to the visiting officials would be of nominal value (namely shirts and tote bags) and bear the requestor’s logo.
- It would not compensate the foreign government or the officials for the visit or fund, organize, or host any other entertainment, side excursion or leisure activities, or provide the officials with any “stipend or spending money.”
- All expenses incurred would be necessary and reasonable and related to the training session regarding the operation of a U.S. insurance company.
Based upon those representations, the Department indicated that it did “not presently intend to take any enforcement action” with respect to the proposed payments.