Imagine a company has a high-profile contract worth around $1 billion. Conversely, imagine there is an ongoing investigation that could cost a similar amount. Now, imagine as the company’s lawyer that you propose a ‘success fee’ of $75 million to make sure the company gets that contract “quickly,” or that the investigation is closed.
Does it matter how quickly you get the contract or how the investigation is closed, or is there another analysis to take into consideration?
These are some of the questions The Man From FCPA ponders, after it was reported that two U.S. lawyers had proposed a success fee in the amount of $75 million if they could get the Department of Justice to drop its investigation into the 1MDB “quickly.” These two lawyers were reported to be fundraisers “close to President Trump,” and they proposed to influence him to get the Justice Department to drop its investigation into 1MDB and Jho Low, who ran the fund for the Prime Minister of Malaysia. The proposal for such action was never formalized in a contract, and during a September 2017 meeting between President Trump and Malaysian Prime Minister Najib Razak, who alleged received $681 million into his personal accounts from 1MDB, the subject was not discussed.
The tale raises issues of what the risk is of a success fee paid to a third-party agent under the Foreign Corrupt Practices Act. A large dollar amount could raise a red flag as it might be seen to create a pot of money to pay a bribe. If the contract is in the range of $1 billion, however, what amount would raise a red flag? One million? Ten million? Seventy-five million dollars?
Further, what work will the third-party agent do? Are they going to try and induce a country’s sitting president to intercede to drop an investigation, or simply point out how or why a government should sign a contract with the client? All interesting questions to consider when evaluating a success fee payment under the FCPA.