DOJ opinion offers take on whether ransom-like payment violates FCPA

FCPA opinion procedures allow U.S. companies to get the attorney general’s judgment on whether certain conduct is in line with the Justice Department’s enforcement policy regarding the FCPA’s anti-bribery provisions. The opinions have no binding application to any party other than the requestor and only to the extent the disclosure of facts and circumstances in its request and supplements is accurate and complete.

The case: The unnamed requestor in October 2021 sought an opinion from the Justice Department as to whether the agency “would presently intend to bring an enforcement action under the FCPA’s anti-bribery provisions” if the requestor were to make a ransom-like payment to a third-party intermediary. The Justice Department followed up with a preliminary response that same month “due to the highly unusual and exigent circumstances identified in the request,” as described in further detail below.

According to representations made by the requestor, an unnamed country’s (Country A) navy detained the logbook and officers’ and crew’s documents from the requestor’s vessel after a shipping agent gave incorrect anchoring coordinates to the captain, according to the opinion procedure. The country’s navy noted in an incident report the requestor vessel was in its waters in violation of various laws and treaties.

The captain was told he would be detained for questioning ashore, while the crew members and officers were ordered to remain onboard the ship. Once ashore, “[T]he captain was detained in jail without being questioned or provided any documentation authorizing his arrest or detention.”

A third party purporting to act on behalf of Country A’s navy demanded from the requestor a cash payment of $175,000. “[O]therwise, the captain and the crew members would be detained for a longer period of time and the vessel would be seized,” the opinion procedure stated.

According to the opinion procedure, the requestor “provided information and documentation showing that the captain was at that time suffering from serious medical conditions that would be significantly exacerbated by the circumstances and conditions of his detention and created a significant risk to his life and well-being.”

Department’s analysis: In its Jan. 21 full response, the Justice Department concluded, “Based on the specific facts presented by requestor, the proposed payment would not trigger an enforcement action under the anti-bribery provisions of the FCPA because requestor would not be making the payment ‘corruptly’ or to ‘obtain or retain business.’”

The Justice Department had issued a short preliminary opinion to the requestor in October given “the risk of imminent harm to the health and well-being of the individuals noted in the request.” Its opinion procedure last month was informed by additional information the requestor provided in response to questions from the agency.

“Based on the information from requestor, the primary reason for the payment was to avoid imminent and potentially serious harm to the captain and the crew of the requestor vessel,” the Justice Department stated. “… [T]he entire episode appears to be the result of an error, emanating from the incorrect advice requestor received about where to anchor its ship.”