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?
Our thinking
Ghassan El Daye
The Business Breakfast interviews Ghassan El Daye on the legal procedures surrounding international extradition
The Business Breakfast interviews Ghassan El Daye on the legal procedures surrounding international extradition
Stephanie Bonnello
Stephanie Bonnello writes for the Practical Law Dispute Resolution blog on witness evidence
When are witness summaries permitted instead of witness statements and when should material be struck out from a witness statement?
Ben Moore
Playing fast and loose with justice: estoppel by conduct
Ben and Simon look at La Micro Group (UK) Ltd and another v La Micro Group Inc and others and its impact on estoppel
Gabrielle Shovlin
Be careful what you reference: when witness evidence waives privilege
Gabrielle looks at the recent decision in Scipharm Sarl v Moorfields Eye Hospital NHS Foundation Trust and its impact on privilege
Rory Partridge
Weighing in on the importance of attention to detail in service cases
Rory looks at recent judgments that have emphasised the need to follow correct procedure when serving documents in court cases
Rhys Novak
Bribery risks to increase; Brexit and COVID to blame?
Stewart Hey
Obtaining documents in the US for proceedings in the UK
Stewart and Simon look at the three potential routes for obtaining documents from third parties located in the US
Stewart Hey
Stewart Hey and Simon Heatley write for ThoughtLeaders4 FIRE on obtaining documents in the US for proceedings in England
In KBR, Inc, R v Director of the Serious Fraud Office, the Supreme Court limited the extraterritorial effects of the SFO's powers.
Hugh Gunson
Danish tax authority loses "cum-ex" case: revenue rule reigns supreme
Hugh and Guy look at the recent decision in Skatteforvaltningen v Solo Capital Partners LLP (in special liquidation) and others
Sonia Kenawy
Adding claimants pre-service and amending outside the limitation period: pitfalls for the unwary
Sonia looks at a recent High Court judgment and its important guidance on the ability of claimants to be added to a claim before service
Joe Edwards
Damages-based agreements: an island of clarity in changing seas
Simon, Joe and Lauren look at a recent judgment which is a welcome island of clarity in the damages-based agreement sea of uncertainty.
Rhys Novak
Rhys Novak quoted by Citywealth on the ways companies can combat potential issues of fraud
Is fraud on the rise and should investors be wary?
Rhys Novak
Bribery & Corruption team successfully act in Italian bribery prosecution
John Sykes
Warranties on an indemnity basis: a question of damages
John and Simon take an in-depth look at warranties on an indemnity basis
Sonia Ghai
Disclosure and documents referenced in expert reports: a level playing field?
Sonia looks at the impact of the recent High Court decision in Zverev v Ace Group International Ltd
Bruno Ledrappier
First international corruption trial held in Geneva
Bruno looks at the recent milestone for Geneva prosecutors
Max Davis
UK agrees to "Surrender" (and other changes to investigations and enforcement options post Brexit)
Hugh Gunson
Embiricos - (partial) closure of route to early resolution of domicile enquiries
Rhys Novak
Companies failing to prevent economic crime? Is a new dawn coming?
Durra Al Ali
“Subject to contract” wording in settlement negotiations: a label that sticks
Durra looks at the term “subject to contract” and how it was put to the test in Joanne Properties Ltd v Moneything Capital Ltd and another.