Can payments made directly to a government be a bribe?
Recently the US Department of Justice (DOJ) published an Opinion Release concerning the Foreign Corrupt Practices Act. This release, numbered 20-01, was the first such release since 2014.
The entity requesting the release (Requestor) wanted to buy some assets held by a foreign investment bank which was indirectly owned by a foreign government. It asked a different foreign subsidiary of the same investment bank to help. That separate subsidiary did indeed help and asked for compensation for the work that they did. The payment was to be made directly to that subsidiary and not to any individual.
On first blush this seems straightforward under the FCPA and almost any other national anti-bribery law. First, the payment was being made directly to a government instrumentality and not to an individual. Secondly, it was a payment for services that were legitimately rendered and commercially reasonable.
However, the Opinion Release goes further. It refers, amongst other things, to the certification provided by the Chief Compliance Officer of the subsidiary that the payment made will be deposited into the subsidiary's bank account and will only be used for the benefit of that company and will not be forwarded to any other entity.
The Opinion Release noted in this regard that "there is no indication that Requestor intends or believes the money will be diverted to any individual, and there is no indication that the money will, in fact, be diverted to any individual". Why has the DOJ referred to the absence of such indicia when the received wisdom is that such a payment would not fall foul of the FCPA.
What it may mean is that the DOJ will start to look at the knowledge of a party as to how payments made directly to a government will be used. Perhaps this is the first sign of a growing willingness across the Atlantic to look beyond the veneer of transactions to see whether individuals behind the government stand to benefit personally. Is the DOJ communicating its position on this in advance of taking actions? If so, will this policy change start to seep across the world and usher in further work for companies doing business directly with foreign government and government agencies? Do companies need to start seeking certification from governments that payments made to them or to others on their behalf will not be used to pay individuals?
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