The relevant request of clarification (for further details on the Opinion Procedure Release (OPR) please see here) was sent to the DOJ in late October 2021. It contained a description of the following situation by an organisation that was a domestic concern under the FCPA:
- A vessel owned by the organisation was awaiting entry into the port of country B in order to undergo required maintenance and to renew technical maritime certificates.
- Due to the fact that the country B ports were fully occupied, the vessel had to temporarily anchor in international waters outside country B; however, incorrect anchoring coordinates led the vessel to anchor in country A’s rather than international waters, and the country A Navy intercepted the vessel. The captain of the vessel was detained in jail by the country A authorities without being questioned or provided any documentation authorizing his arrest or detention on the ground that the vessel “was in country A waters in violation of various laws and treaties”; at the same time the captain was 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.
- Shortly following the detention of the captain a third party purporting to act on behalf of the country A Navy approached the crew of the vessel and demanded a payment in cash of $175,000 to release the captain and to permit the crew and the vessel to leave country A waters (to engage with the intermediary the corporate owner of the vessel retained the services of an agent on which it had recently conducted due diligence). Otherwise the captain and the crew members would be detained for a longer period of time and the vessel would be seized. In spite of the fact that the country A intermediary insisted that the payment was an official payment, the repeated requests to provide a formal basis for the payment - such as an invoice or other documentation setting forth charges or an enumerated fine amount - was rejected. Consequently, the organisation had reasonable grounds to believe that the request to make the payment was actually extortion.
- As the request of assistance from U.S. agencies produced no results the only way out for the organisation was to pay the requested sum of money to the intermediary.
In this context, the organisation asked the DOJ to clarify whether it would consider the financial payment to the intermediary of the country A Navy as a bribe and, as a consequence, whether the conduct conformed with the DOJ’s enforcement policy regarding the provisions of the FCPA.
In its OPR, the DOJ pointed out that the proposed payment would not trigger an enforcement action under the provisions of the FCPA because the organisation “would not be making the payment “corruptly” or to “obtain or retain business”.
In particular, the Department, making reference to the decision in U.S. v. Kozeny (see here and here) highlights that “the term “corruptly” is intended to connote that the offer, payment, and promise was intended to influence an official to misuse his official position”; conversely, “an individual who is forced to make payment on threat of injury or death would not be liable under the FCPA; Federal criminal law provides that actions taken under duress do not ordinarily constitute crimes”.
The DOJ also provides an abstract from the Resource Guide to the U.S. Foreign Corrupt Practices Act according to which “situations involving extortion or duress will not give rise to FCPA liability because a payment made in response to true extortionate demands under imminent threat of physical harm cannot be said to have been made with corrupt intent or for the purpose of obtaining or retaining business”.
Additionally, the Department emphasizes that based upon the information provided, the payment was not motivated by an intent to obtain or retain business, as the company had no ongoing or anticipated business with country A, and the entire episode appeared to be the result of an error, emanating from the incorrect advice the organisation had received about where to anchor its ship. In so doing, it was possible that the organisation had inadvertently violated country A regulations and laws, and/or other rules governing shipping routes and anchoring locations. Furthermore, rather than conceal the payment demand, the company engaged with various U.S. government personnel and requested proper documentation from the country A government setting forth the alleged violation and appropriate fine, i.e. it wanted to find a legal solution to the situation rather than to conceal it.
Experts stress that this seemingly plain and obvious opinion of the DOJ in truth raises two significant questions about the limitations on the enforcement of the provisions of the FCPA.
Firstly, the OPR seems to expand the circumstances to be considered as “extortion of a bribe”. A common feature of extorted payments is that an official uses their power to do something knowingly wrong. However, there is no suggestion that country A acted improperly in detaining the captain without being questioned or provided any documentation authorizing his arrest or were not guided by the actual provisions of its domestic laws in requesting the payment for his release: the legal provisions of certain countries may seem to be objectionable or violate human rights from the point of view of the U.S. democratic stance, however they cannot be considered “out of law” for that reason alone. Therefore, the actual (however seemingly unintended) implication of the DOJ’s opinion is that if the laws of a particular country or the mistreatment of those who violate them seem unjust the payment of a bribe to thwart local enforcement will be a justifiable measure.
Secondly, the OPR narrows the interpretation of the term “obtaining or retaining business”, which in the previous decade had consistently enjoyed an expansive reading. For instance, in the ruling in Kay & Murphy the court stressed that a violation would consist also in a bribe that might assist to obtain and retain business in the future. The request of the organisation shows that in the circumstances described, if it had not made the payment it would have run the risk of not only protracting the detention of the captain and the crew, but also of its vessel being seized, which would have inflicted a damage to the company in the future. However, the DOJ did not find that those circumstances indicated that the organisation intended to obtain or retain business, believing that the need to release the captain suffering from health problems was a clearly prevailing objective for the organisation.
Therefore, the DOJ’s opinion seems in a way to be a move toward “softer” interpretation of the provisions of the FCPA regulating “extortion of a bribe” and “obtaining and retaining business”. However, taking account of the non-binding nature of the OPRs, it is still recommended that companies be guided by an expansive reading of the FCPA provisions by law enforcement: it is highly likely that the softer stance of the Department was motivated by the specific circumstances of the case suggesting a real risk of harm to the health and well-being of the captain of the ship.