On 17 March 2014, the US Department of Justice released its opinion on an FCPA request by an undisclosed US financial services company and investment bank. The question at issue was whether the foreign subsidiary of the company could buy back the minority interest of a former executive, who had become a senior government official in a ministry responsible for doing business with and regulating the foreign subsidiary.
The DOJ said it would not prosecute the company because the foreign subsidiary took a number of appropriate precautions before buying back the stock, and thus showed that it was not attempting to buy influence from a foreign official. First, the former executive "ceased to have any role or function" at the foreign subsidiary "other than as a passive shareholder" upon his departure for the government. Second, the former executive appropriately "recused himself from any decision concerning the award of business [to the company] or [its] affiliates . . . and has not involved himself in any supervisory or regulatory matters with respect to" the company or its affiliates. Third, the company hired a global accounting firm to determine the value of the former executive's stock, which "provide[d] additional assurance that the payment reflect[ed] the fair market value of [the former executive's interest], rather than an attempt to overpay . . . for a corrupt purpose." Finally, the DOJ noted that severing the relationship was prudent because it prevented an ongoing conflict of interest.
The DOJ's opinion should give companies comfort that, when transparent, transitions of executives to and from government positions can be managed appropriately in a way that does not subject the company to potential FCPA investigation or prosecution.
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