Issue Presented

Could certain US based non-profits pay to bring a large number of foreign officials to the US, including paying for business class flights?

Facts

In Opinion Release 12-02, the Requestors, 19 non-profit adoption agencies located in the US, asked the DOJ about bringing certain foreign governmental officials involved in the foreign country’s adoption process to the US. All the foreign governmental officials are involved in the process of allowing children from their country go through the adoption process with the US non-profits involved. The trips to the US were for two days of meetings.

The purpose of the visit will be to demonstrate the Requestors’ work to the government officials so that the officials can see how adopted children from the foreign country have adjusted to life in the US and to help the Requestors learn how they can ensure that they provide the foreign country’s government with appropriate information during the adoption process. The Requestors will allow the government officials to meet with the Requestors’ employees and to inspect the Requestors’ offices and case files from previous adoptions. The foreign country’s government officials will also meet with families who have adopted children from their country and learn more about the Requestors’ work.

Representations

The Opinion Release set out the representations made by the Requestors to the DOJ which formed the basis for its decision. The Requestors stated that they would pay for the following:

  • Business class airfare on international portions of flights for ministers, members of the legislature, and the director of the Orphanage Agency; coach airfare for international portions of flights for all other government officials; and coach airfare for domestic portions of flights for all government officials;
  • Two or three nights hotel stay at a business-class hotel;
  • Meals during the officials’ stays; and
  • Transportation between agencies and local transportation.

The DOJ also noted the Requestors spending on meals and hotels would not exceed the rate set by the US General Services Administration for US government employees traveling within the US. The Requestors also made the following representations which are consistent with prior DOJ guidance on travel, meals and entertainment.

  • Entertainment – The entertainment will be of nominal cost and will involve families who have adopted children from the foreign country. In other words, a clear business purpose is involved.
  • Selection – The Requestors did not select the foreign governmental officials to attend the trip but left that decision to the foreign government.
  • No WAGS – The Requestors would only host the foreign governmental officials selected for the trip. There would be no spouses or family members brought along on this trip.
  • Souvenirs – If there are any souvenirs presented to the visiting foreign officials, they will be of nominal value.
  • Spending money – There will be no spending money provided to the foreign officials and they will not receive any stipends. There will be no additional monies paid to the visiting officials in any form.

DOJ Analysis

The DOJ began its analysis by noting that it had issued a series of “favorable Opinion Releases with respect to sponsoring travel and related expenses for foreign officials.” These included Opinion Release 11-01, where the DOJ issued an opinion in response to a request from an adoption service provider, declining to take enforcement action if the company proceeded with sponsoring expenses for a trip, including international airfare to the United States, by one official from each of two foreign agencies of a Central American government.” In Opinion Releases 07-02 and 07-01, the DOJ “issued opinions in response to requests from private companies in the United States, declining to take enforcement action if the companies proceeded with paying domestic expenses for trips by officials from Asian governments. In all three Opinion Releases, the requestors made representations and took corresponding measures to ensure that the proposed trips met the criteria of the affirmative defense covering reasonable and bona fide expenditures under” the FCPA.

The DOJ cited four key items found in this matter.

  • First, the expenses described above are reasonable under the circumstances. This includes the provision of business class airfare for high-ranking officials. ,
  • Second, the expenses were permitted by the Foreign Country.
  • Third, the expenses are directly related to the promotion, demonstration, and explanation of the Requestors’ services.
  • Fourth, no corrupt intent was present.

The DOJ found the representations by the Requestors, including additional information received from the Requestors, were all consistent with the prior Opinion Releases in this area; that “the proposed expenses reflect no corrupt intent and appear to be bona fide promotional expenses. The expenses contemplated are reasonable under the circumstances and directly relate to “the promotion, demonstration, or explanation of [the Requestors’] products or services.” All of this means that  “with respect to the trips that the Requestors propose paying for, based on the representations made in the Request, including those recited above, as well as the Department’s review of supplemental materials submitted by the Requestors, the Department does not presently intend to take enforcement action.”

Discussion

I believe that Opinion Release 12-02 shows once again that if you have a compliance question or concern, the Opinion Release procedure is available to you to ask the DOJ if your proposed activity would violate the FCPA. But more than simply showing the procedure, I think that the DOJ once again shows how a reasoned approach, laid out in a rational manner, will be seriously considered, reviewed and can lead to a favorable result. Even the question of business class airfare can be handled in reasoned approach as shown by this Opinion Release.

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