The FCPA Opinion

If the opinion is issued, it creates a rebuttable presumption that a requestor's conduct is in compliance with the FCPA. The Attorney General opines that such a presumption may be rebutted by a preponderance of the evidence and that a court “shall weigh all relevant factors, including but not limited to whether information submitted to the Attorney General was accurate and complete and whether the activity was within the scope of the conduct specified in any request received by the Attorney General.”

The Rebuttable Presumption

Because the opinion states that the requestor's “conduct is in conformity with the Department of Justice's present enforcement policy,” the rebuttable presumption it creates amounts to an affirmative defense that payments to a foreign official were “a reasonable and bona fide expenditure.” It may, if the opinion addresses the subject, support the affirmative defense that the payments were “lawful under the written laws and regulations of the foreign official's ' country.”

The opinion will be issued within 30 days of the submission of the last relevant information provided or requested by the Attorney General.

Procedural Qualifiers

There are the usual procedural qualifiers. The requestor has to be subject to the bribery provisions, and the opinion does not bind any other agency or any party that does not join in the request.

While the Attorney General may release the identity of the requesting issuer, the identity of the foreign country in which the proposed conduct is to take place, the general nature and circumstances of the proposed conduct, and the action taken in response to the FCPA Opinion request, the release of this information shall not include either the identity of any foreign sales agents or other types of identifying information. Material related to the request is exempt from disclosure under the Freedom of Information Act. Finally, the Attorney General, upon the requestor's initiative, will not disclose proprietery information divulged in the request.

Why Is an Opinion So Rarely Evoked?

While the opinion process may seem to have an initial appeal to a corporation seeking shelter for foreign ventures, the infrequency of the issuance of opinions raises an initial question of why such a seemingly useful device is so rarely evoked.

The Attorney General issued 39 opinions during the period from 1993-2011. Only one opinion has been issued in 2011. Under a similar predecessor process utilized from 1980 to 1992, 22 opinions (deemed “reviews”) were issued. Thus, over 31 years, fewer than two opinions were issued annually.

There may have been few requestors, or the Attorney General may have been reluctant to issue opinions. Because the opinions were issued over a long period of time under several administrations, it is unclear whether there is any consistent explanation of the small number of opinions. The main point is that there seems little incentive to seek an opinion when the prospects of one being issued seem low. A final judgment about success rates turns on the actual number of requests through the years, a number that is unknown.

Further, the Attorney General is quite explicit about the validity of the opinion turning on the requestor's specification of prospective facts. Yet because the information is given prospectively, some alteration of the facts presented in the request could be possible.

The opinion may exist, but the rebuttable presumption arises only when a requestor's conduct as specified in a request is in question. If the information submitted to the Attorney General was not accurate and complete or if the activity was not within the scope of the conduct specified in any request, the opinion is a dead letter because it does not support the rebuttable presumption.

Structure of the Rebuttable Presumption

The structure of the rebuttable presumption provision highlights the danger in the drafting of the prospective facts. For example, Opinion 11-1, the latest and only opinion of the year, deems the following material prospective facts: “Any souvenirs that the Requestor gives the visiting officials would reflect Requestor's business and/or logo and would be of nominal value”; and “The Requestor has invited another adoption service provider to participate in the visit.” What is “nominal” and what is the scope of the effort to “invite” another service?

These may be quibbles, but the value of this opinion to the requestor is in the rebuttable presumption created by the Attorney General's opinion. The existence of the rebuttable presumption turns on the prospectively proffered facts being true.

No Certainty

No certainty exists for the requestor if the Attorney General adopts a grudging attitude in interpreting the veracity or exactness of the requestor's prospective statement of facts. In actuality, there is no known compilation of cases in which the rebuttable presumption was raised as an issue.

The opinions could be a guide to the Attorney General's current “present enforcement intention” or as precedent. For example, Opinion 11-1 sets out the issue of sponsorship of travel expenses for foreign officials by a U.S adoption agency. The officials would be selected by the foreign government, and no money would be paid directly to the officials.

Opinion 11-1 cites two prior opinions. Opinions 07-1 and 07-2 rule that where a U.S. sponsor “has no non-routine business pending” before the foreign agency that employs the travelling officials or “did not currently conduct operations in the foreign country,” there is no violation in sponsorship of travel. However, Opinion 11-1 deals with a situation where the sponsor has a routine business before the relevant foreign government agencies which consists primarily of seeking approval of pending adoptions.

Precedential Lessons

The only precedential lesson to be drawn from Opinion 11-1's citation of the prior opinions is that there is no threat of FCPA prosecution if the U.S. business is conducting routine business in the country, or does not conduct non-routine, i.e., discretionary, business in the country, or does not conduct operations in the foreign country. The U.S. business may sponsor travel, all other factors being equal, regardless of the nature of its business in the foreign country.

This can't be the case. While the FCPA prohibits corrupt payments to foreign officials for the purpose of obtaining or keeping business, surely whether a U.S. business has “skin in the game” in the country already
is a practical consideration in determining whether prosecution would occur. It would not seem a negligible factor in any prospective situation.

Thus, the chances of obtaining an opinion appear small; the value of the opinion is questionable unless each and every material prospective fact is true; and an opinion may not serve as guidance for others as a statement of policy or as precedent.

This summary reveals the ultimate flaw undermining the utility of the opinions. They are sketchy to the point that they have no meaning to the non-party reader. The Attorney General's own regulation authorizes the description of “the identity of the requesting issuer or U.S. concern [and] the identity of the foreign country in which the proposed conduct” will occur. Yet Opinion 11-1 and other opinions are cloaked in secrecy. Would it matter if the adopting agency was a government entity or a for-profit placement mill? Would it matter if Opinion 11-1 dealt with Canadian or Nigerian officials? Would the law governing adoptions, including routine and non-routine adoption decisions, be different in different countries? Would the resources of the requestor, the foreign country, and its officials be relevant to the opinion?

This curious lack of specificity is simply inexplicable in a public document. It is as if the opinion system were a catalogue of private licensing by the Department of Justice (DOJ) for particular kinds of foreign ventures by domestic businesses.

Conclusion

Until some more obvious purpose is made clear, the purpose of the opinion procedure appears to sanction a very few private transactions (which are exempt from the FOIA) from real public scrutiny.

In practical terms, an opinion is neither transparent nor useful as guidance for a client. A litigator should counsel a possible requestor that the opinions are, at best, a registry of anonymous private licenses and no firm guidance can be gained from them.

James Ching is a former Supervising Deputy Attorney General, California Department of Justice.

Surely the most obscure feature of the Federal Corrupt Practices Act (FCPA) is the issuance and use of opinions. Simply put, the Attorney General will, under certain circumstances, issue an opinion that validates a future corporate venture into a foreign country. The opinion provides immunity from FCPA prosecution for bribery, that is, an official declaration that the prospective actions of the requestor do not constitute FCPA prohibited actions under 15 U.S.C. sections 78dd-1(a) and 78dd-2(a).

Obtaining an Opinion

The procedure for obtaining an opinion is not complex. Prior to the U.S. requestor's contractual commitment to proceed with a foreign transaction, a proper request will elicit an opinion of the Attorney General “as to whether certain specified, prospective ' not hypothetical ' conduct conforms with the Department's present enforcement policy regarding the anti-bribery provisions of the” FCPA.

If the opinion is issued, it creates a rebuttable presumption that a requestor's conduct is in compliance with the FCPA. The Attorney General opines that such a presumption may be rebutted by a preponderance of the evidence and that a court “shall weigh all relevant factors, including but not limited to whether information submitted to the Attorney General was accurate and complete and whether the activity was within the scope of the conduct specified in any request received by the Attorney General.”

The Rebuttable Presumption

Because the opinion states that the requestor's “conduct is in conformity with the Department of Justice's present enforcement policy,” the rebuttable presumption it creates amounts to an affirmative defense that payments to a foreign official were “a reasonable and bona fide expenditure.” It may, if the opinion addresses the subject, support the affirmative defense that the payments were “lawful under the written laws and regulations of the foreign official's ' country.”

The opinion will be issued within 30 days of the submission of the last relevant information provided or requested by the Attorney General.

Procedural Qualifiers

There are the usual procedural qualifiers. The requestor has to be subject to the bribery provisions, and the opinion does not bind any other agency or any party that does not join in the request.

While the Attorney General may release the identity of the requesting issuer, the identity of the foreign country in which the proposed conduct is to take place, the general nature and circumstances of the proposed conduct, and the action taken in response to the FCPA Opinion request, the release of this information shall not include either the identity of any foreign sales agents or other types of identifying information. Material related to the request is exempt from disclosure under the Freedom of Information Act. Finally, the Attorney General, upon the requestor's initiative, will not disclose proprietery information divulged in the request.

Why Is an Opinion So Rarely Evoked?

While the opinion process may seem to have an initial appeal to a corporation seeking shelter for foreign ventures, the infrequency of the issuance of opinions raises an initial question of why such a seemingly useful device is so rarely evoked.

The Attorney General issued 39 opinions during the period from 1993-2011. Only one opinion has been issued in 2011. Under a similar predecessor process utilized from 1980 to 1992, 22 opinions (deemed “reviews”) were issued. Thus, over 31 years, fewer than two opinions were issued annually.

There may have been few requestors, or the Attorney General may have been reluctant to issue opinions. Because the opinions were issued over a long period of time under several administrations, it is unclear whether there is any consistent explanation of the small number of opinions. The main point is that there seems little incentive to seek an opinion when the prospects of one being issued seem low. A final judgment about success rates turns on the actual number of requests through the years, a number that is unknown.

Further, the Attorney General is quite explicit about the validity of the opinion turning on the requestor's specification of prospective facts. Yet because the information is given prospectively, some alteration of the facts presented in the request could be possible.

The opinion may exist, but the rebuttable presumption arises only when a requestor's conduct as specified in a request is in question. If the information submitted to the Attorney General was not accurate and complete or if the activity was not within the scope of the conduct specified in any request, the opinion is a dead letter because it does not support the rebuttable presumption.

Structure of the Rebuttable Presumption

The structure of the rebuttable presumption provision highlights the danger in the drafting of the prospective facts. For example, Opinion 11-1, the latest and only opinion of the year, deems the following material prospective facts: “Any souvenirs that the Requestor gives the visiting officials would reflect Requestor's business and/or logo and would be of nominal value”; and “The Requestor has invited another adoption service provider to participate in the visit.” What is “nominal” and what is the scope of the effort to “invite” another service?

These may be quibbles, but the value of this opinion to the requestor is in the rebuttable presumption created by the Attorney General's opinion. The existence of the rebuttable presumption turns on the prospectively proffered facts being true.

No Certainty

No certainty exists for the requestor if the Attorney General adopts a grudging attitude in interpreting the veracity or exactness of the requestor's prospective statement of facts. In actuality, there is no known compilation of cases in which the rebuttable presumption was raised as an issue.

The opinions could be a guide to the Attorney General's current “present enforcement intention” or as precedent. For example, Opinion 11-1 sets out the issue of sponsorship of travel expenses for foreign officials by a U.S adoption agency. The officials would be selected by the foreign government, and no money would be paid directly to the officials.

Opinion 11-1 cites two prior opinions. Opinions 07-1 and 07-2 rule that where a U.S. sponsor “has no non-routine business pending” before the foreign agency that employs the travelling officials or “did not currently conduct operations in the foreign country,” there is no violation in sponsorship of travel. However, Opinion 11-1 deals with a situation where the sponsor has a routine business before the relevant foreign government agencies which consists primarily of seeking approval of pending adoptions.

Precedential Lessons

The only precedential lesson to be drawn from Opinion 11-1's citation of the prior opinions is that there is no threat of FCPA prosecution if the U.S. business is conducting routine business in the country, or does not conduct non-routine, i.e., discretionary, business in the country, or does not conduct operations in the foreign country. The U.S. business may sponsor travel, all other factors being equal, regardless of the nature of its business in the foreign country.

This can't be the case. While the FCPA prohibits corrupt payments to foreign officials for the purpose of obtaining or keeping business, surely whether a U.S. business has “skin in the game” in the country already
is a practical consideration in determining whether prosecution would occur. It would not seem a negligible factor in any prospective situation.

Thus, the chances of obtaining an opinion appear small; the value of the opinion is questionable unless each and every material prospective fact is true; and an opinion may not serve as guidance for others as a statement of policy or as precedent.

This summary reveals the ultimate flaw undermining the utility of the opinions. They are sketchy to the point that they have no meaning to the non-party reader. The Attorney General's own regulation authorizes the description of “the identity of the requesting issuer or U.S. concern [and] the identity of the foreign country in which the proposed conduct” will occur. Yet Opinion 11-1 and other opinions are cloaked in secrecy. Would it matter if the adopting agency was a government entity or a for-profit placement mill? Would it matter if Opinion 11-1 dealt with Canadian or Nigerian officials? Would the law governing adoptions, including routine and non-routine adoption decisions, be different in different countries? Would the resources of the requestor, the foreign country, and its officials be relevant to the opinion?

This curious lack of specificity is simply inexplicable in a public document. It is as if the opinion system were a catalogue of private licensing by the Department of Justice (DOJ) for particular kinds of foreign ventures by domestic businesses.

Conclusion

Until some more obvious purpose is made clear, the purpose of the opinion procedure appears to sanction a very few private transactions (which are exempt from the FOIA) from real public scrutiny.

In practical terms, an opinion is neither transparent nor useful as guidance for a client. A litigator should counsel a possible requestor that the opinions are, at best, a registry of anonymous private licenses and no firm guidance can be gained from them.

James Ching is a former Supervising Deputy Attorney General, California Department of Justice.