Last week I wrote about the first Opinion Release for 2022, appropriately named Opinion Release 22-01. Several persons emailed me about my analysis and discussion, concluding with the point that there was no need for an Opinion Release on this issue. Jon May made that same argument publicly. Their collective thoughts were that this was a straight extortion claim made against the shipping company (Relator in 22-01) and as both the liberty and health of the ship captain were in immediate danger, there was no need to obtain an Opinion Release from the Department of Justice (DOJ) as this matter fell precisely within extortion and therefore outside the Foreign Corrupt Practices Act (FCPA).
I agree with all those who contacted me or put such an opinion in print. The shipping company could have made the payment without the DOJ Opinion Release and in my opinion not run afoul of the FCPA. There is certainly nothing wrong in being cautious and obtaining an Opinion Release on this issue, particularly given the expediency of the DOJ response to the company which sought the Opinion Release, which was literally given in the time span of a few days. However, such a need for cautiousness is not mandated under the FCPA.
If your company or client is facing a situation where its employees are being held and no charges are forthcoming, their liberty is at risk, if your employees are threatened at gun point or in some other manner where the physical safety is at risk, or if your employee’s health is put at risk, and money is demanded to relieve any of these situations; then the FCPA does not apply and your organization or the employees themselves can make the payment and not face FCPA risk.
It is incumbent to remember extortion payments are not illegal under the FCPA. Extortion payments are made for any action which threatens or demands payment for life, liberty, or health. These should be exempted out from your facilitation payments and your compliance program through specific language. You need to do this for a variety of reasons. First and foremost, your employees must understand that the company will support them if they are in any way threatened with harm, arrest or physical detention and/or their health/safety is threatened. As a compliance professional, you need to make sure they understand they need to do whatever they have to do to get themselves out of such a situation.
Some of the situations your employees might face are along the lines of the following:
- Employees are stopped by police, military or paramilitary personnel, or militia (uniformed or not) at designated or other checkpoints or other places and a payment is demanded as a condition of passage of persons or property.
- Employees are stopped at the airport by customs or passport control personnel or military personnel and a payment is demanded for entry or exit of persons or property.
- Employees are asked by persons claiming to be security personnel, immigration control, or health inspectors to pay for an allegedly required inoculation or other similar procedure.
I once had a situation in which an employee was threatened with receiving a vaccination for yellow fever when he was departing a west African country. The employee paid some $85 to get out of that situation. I instructed him to submit it as a travel expense, writing out in a four-sentence paragraph, attached to his expense report. The documentation proved that payment was not a facilitation payment. It was clearly an extortion payment.
In Opinion Release 22-01, the ship captain of the Relator in question was detained by the un-named Country A with no written documentation of the charges. Moreover, according to the Opinion Release 22-01, “Requestor has 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.”
If your employees pull up to a roadblock and government authorities pull guns, there is a clear threat of physical safety for those employees. They should pay whatever amount they can to extricate themselves from the situation as quickly as possible.
The key though in each of these situations is that it be properly documented, even if under the first and third scenario above, such documentation could be a handwritten statement by your employees who were a part of the extortion attempt. But more than simply the documentation is that you must specifically list extortion payments in your books and records, so you will not be suspected with hiding them by describing them as something else. It is crucial to train your employees specifically on the actions to take. In your policy, you should clearly state that if there is a threat to health, safety or liberty, it is not a facilitation payment but an extortion payment. Make sure that they understand what their rights are and what their obligations are to report it when they return to their office. Always remember, an extortion payment is not a FCPA violation.
In Opinion Release 22-01, the DOJ stated, “The facts presented by Requestor demonstrate that the proposed payment would not be made with corrupt intent. 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. Under the FCPA, “[a] person acts corruptly if he acts voluntarily and intentionally, with an improper motive of accomplishing either an unlawful result or a lawful result by some unlawful method or means. The term ‘corruptly’ is intended to connote that the offer, payment, and promise was intended to influence an official to misuse his official position.”” This is a correct statement of the FCPA. But it is also a correct statement to say that extortion payments are not made illegal under the FCPA.
