On September 1, 2010, the Department of Justice (“the Department”) issued Opinion Procedure Release No. 10-03 (“the Opinion”), its third of the year.1 The Opinion was issued in response to the request of a U.S. limited partnership (“the Requestor”) involved in the development of natural resources and trading infrastructure around the world. The Opinion addressed the Requestor’s plan to engage a U.S. partnership (“the Consultant”) and its owner to assist the Requestor in its efforts to gain foreign government approval for a natural resources infrastructure project. The Requestor represented that the Consultant “has previously and currently holds contracts to represent the foreign government and act on its behalf,” and is a registered agent of a foreign government under the Foreign Agents Registration Act. The Consultant also has represented agencies of the foreign government, including the Ministry of Finance, that would have a role in the approval of the Requestor’s project. In light of these circumstances, the Department considered whether the Consultant would, for the purposes its contract with the Requestor, be a “foreign official” under the FCPA.
The Department noted that the definition of a foreign official includes not only “any officer or employee of a foreign government[,]” but also “any person acting in an official capacity for or on behalf of any such government. . . .” However, the Department stated that payments to foreign officials are not prohibited in all cases, and referenced four previous Review and Opinion Procedure Releases in which business arrangements with foreign officials had been approved.2 The Department explained in the Opinion that in cases involving business relationships with foreign officials, it
typically looks to determine whether there are any indicia of corrupt intent, whether the arrangement is transparent to the foreign government and the general public, whether the arrangement is in conformity with local law, and whether there are safeguards to prevent the foreign official from improperly using his or her position to steer business to or otherwise assist the company, for example through a policy of recusal.
With regard to the facts presented by the Requestor, the Department found that because the Consultant was an “agent” of a foreign government, the Consultant and its employees could, “in certain circumstances[,]” be foreign officials under the FCPA. In this instance, because the Requestor had represented that it had implemented several safeguards to ensure that there would be no conflict of interest between its relationship with the Consultant and the Consultant’s “separate and unrelated representation of the foreign government,” the Department concluded that “the Consultant and its owner are not acting on behalf of the foreign government and therefore are not foreign officials.”
In reaching its determination, the Department found the following measures implemented by the Requestor to be particularly relevant:
1. the owner of the Consultant would not lobby on behalf of the foreign government during the term of the Consultant’s representation of the Requestor;
2. employees of the Consultant continuing their representation of the foreign government during the term of the consultancy with the Requestor would be “walled off” from the Consultant’s relationship with the Requestor;
3. the arrangement would be disclosed to relevant parties, including the Ministry of Finance of the foreign government;
4. the Consultant’s simultaneous representation of both the foreign government and the Requestor is permitted under local law; and
5. the Consultant and its owner agreed to limit further representation of the foreign government, and not to represent or have any business relationship with it regarding the Requestor’s project.
Taken together, the Department found that these safeguards were “sufficient to ensure that the Consultant would not be acting on behalf of the foreign government in performing the consulting contract with the Requestor.” The Department cautioned, however, that its opinion was narrowly limited to the question of whether the Consultant would qualify as a “foreign official” with respect to the particular transaction that was the subject of the request. The Department specifically noted that it did not opine regarding other aspects of the proposed consultancy contract. Indeed, the Department warned that although the Consultant would not be considered a “foreign official” under the FCPA, “the proposed relationship increases the risk of potential FCPA violations” that could lead to enforcement action.
Opinion Procedure Release 10-03 follows the current Department policy of explaining in detail the Department’s analysis of the facts presented and its interpretation of the FCPA in relation to those facts, a welcome development in light of the relatively small number of decisions interpreting the Act. By making its interpretive process more transparent, the Department necessarily invites commentary on its analysis, in this case, perhaps, leading to the question of why it was necessary to opine on the status of the Consultant as a “foreign official” if the retention of the Consultant would be under these circumstances “sufficient to ensure that the Consultant will not be acting on behalf of the foreign government in performing the consulting contract with the Requestor.”3 In other words, did the safeguards change the Consultant’s status as an “official” or simply reduce the likelihood that it could influence an act or decision of the government? Either way, the Department could have reached the same result.
As with all FCPA Opinion Procedure releases, the Department noted that the release has no binding application to parties other than the Requestor, and that the Requestor could rely upon the Department’s Opinion only to the extent that the facts disclosed in the request were accurate and complete.