DOJ Guidance on Charitable Donations and FCPA Compliance

also were not in compliance with the company’s internal policies, which provided that charitable donations gener- ally should be made to healthcare institutions and relate to the practice of medicine.’” Proper due diligence and controls are critical for charitable giving. In general, the adequacy of measures taken to prevent misuse of charitable donations will depend on a risk-based analysis and the specific facts at hand. In Opinion Procedure Release No. 10-02, DOJ described the due diligence and controls that can minimize the likelihood of an FCPA violation. In that matter, a Eurasian-based sub- sidiary of a U.S. non-governmental organization was asked by an agency of a foreign government to make a grant to a local microfinance institution (MFI) as a prerequisite to the subsidiary’s transformation to bank status. The subsid- iary proposed contributing $1.42 million to a local MFI to satisfy the request. The subsidiary undertook an extensive, three-stage due diligence process to select the proposed grantee and imposed significant controls on the proposed grant, including ongoing monitoring and auditing, ear- marking funds for capacity building, prohibiting compen- sation of board members, and implementing anti-corrup- tion compliance provisions. DOJ explained that it would not take any enforcement action because the company’s due diligence and the controls it planned to put in place sufficed to prevent an FCPA violation. Other opinion releases also address charitable-type grants or donations. Under the facts presented in those releases, DOJ approved the proposed grant or donation,'™ based on due diligence measures and controls such as: e certifications by the recipient regarding compliance with the FCPA;! e due diligence to confirm that none of the recipient’s officers were affiliated with the foreign government at issue;1 * arequirement that the recipient provide audited financial statements;!° * awritten agreement with the recipient restricting the use of funds;'” ® steps to ensure that the funds were transferred to a valid bank account;!” 19 e confirmation that the charity's commitments were 109 and met before funds were disbursed; * on-going monitoring of the efficacy of the program.!!° Legitimate charitable giving does not violate the FCPA. Compliance with the FCPA merely requires that charitable giving not be used as a vehicle to conceal pay- ments made to corruptly influence foreign officials. Five Questions to Consider When Making Charitable Payments in a Foreign Country: 1. What is the purpose of the payment? 2. Is the payment consistent with the company’s internal guidelines on charitable giving? 3. Is the payment at the request of a foreign official? 4. Is a foreign official associated with the charity and, if so, can the foreign official make decisions regarding your business in that country? 5. Is the payment conditioned upon receiving business or other benefits? Who Is a Foreign Official? The FCPA’s anti-bribery provisions apply to corrupt payments made to (1) “any foreign official’; (2) “any foreign political party or official thereof”; (3) “any candidate for foreign political office”; or (4) any person, while knowing that all ora portion of the payment will be offered, given, or promised to an individual falling within one of these three categories.'' Although the statute distinguishes between a “foreign official, “foreign political party or official thereof? and “candidate for foreign political office” the term “for- eign official” in this guide generally refers to an individual falling within any of these three categories. The FCPA defines “foreign official” to include: any officer or employee of a foreign government or any department, agency, or instrumentality thereof, HOUSE_OVERSIGHT_022521