With the US Supreme Court holding that it is legal to politically extort any jurisdiction beneath you and the Trump Justice Department stating that is also now legal to lie to the FBI, I thought it would be a good time to review your written policies around extortion payments. Obviously the two legal decisions announced yesterday will apply most often in the domestic arena but no doubt the Trump Administration will now engage in full-fledged extortion for federal dollars and health care needs. So, you had better prepare in the corporate world.

For compliance officers’ purposes, extortion payments are not illegal under the Foreign Corrupt Practices Act (FCPA). Extortion payments are made for any action which threatens or demands payment for life, liberty, or health. These should be exempted out from your facilitation payments and your compliance program through specific language. You need to do this for a variety of reasons. First and foremost, your employees must understand that the company will support them if they are in any way threatened with harm, arrest or physical detention and/or their health/safety is threatened. As a compliance professional, you need to make sure they understand they need to do whatever they have to do to get themselves out of such a situation. 

Some of the situations your employees might face are along the lines of the following:

  • Employees are stopped by police, military or paramilitary personnel, or militia (uniformed or not) at designated or other checkpoints or other places and a payment is demanded as a condition of passage of persons or property;
  • Employees are stopped at the airport by customs or passport control personnel or military personnel and a payment is demanded for entry or exit of persons or property; or
  • Employees are asked by persons claiming to be security personnel, immigration control, or health inspectors to pay for an allegedly required inoculation or other similar procedure

I once had a situation where an employee was threatened with receiving a vaccination for yellow fever when he was departing a west African country. The employee paid some $85 to get out of that situation. I instructed him to submit it as a travel expense, writing out in a four-sentence paragraph, attached to his expense report. The documentation proved that payment was not a facilitation payment. It was clearly an extortion payment.

The key though is that it be properly documented. But more than simply the documentation is that you must specifically list extortion payments in your books and records, so you will not be suspected with hiding them by describing them as something else. The key is to train your employees specifically on the actions to take. In your policy state that if there is a threat to health, safety or liberty, it is not a facilitation payment but an extortion payment. Make sure that they understand what their rights are and what their obligations are to report it when they return to their office. Always remember, an extortion payment is not a FCPA violation.

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2020