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Unpeeling Opinion Procedure Releases

Our post about DOJ Release 08-03 -- which deals with the payment of promotional expenses to journalists from state-owned media in China -- drew this response from Frequent Reader . . .

Interesting, but the value of the release is uncertain to commercial companies that cannot meet the stipulation that they "have no business pending with any PRC government agency." Unlike TRACE, many US companies are in China to conduct commercial business which inevitably means business will likely be pending with a PRC agency or state-owned entity.

We responded this way . . .

Careful. TRACE's "representations" are not necessarily "conditions" applicable to all companies in a similar situation. For example, in at least one other recent Release related to the PRC involving promotional expenses, Release 07-02 (September 11, 2007), the Requestor represented that it had no non-routine business pending before the agency that employed the specific "foreign officials" receiving payments. That's a much narrower representation and could apply to many or even most companies. Our view is that this Release should not be construed too narrowly but rather should take prior Releases into account.

Since we're the blogger here, we're going to say a bit more . . .

When it comes to DOJ Opinion Procedure Releases, user beware. A too-literal reading can distort the analysis. Before we get into that, though, we want to say a few words in praise of Releases.

FCPA practitioners don't have a body of appellate opinions to help unlock the law's mysteries. Instead we have Releases. Although not binding on anyone except the requesting parties, and not creating legal precedent in the strict sense for anyone else, Releases are influential in the world of compliance. With so little FCPA litigation, Releases become a de facto substitute for judicial interpretation. They don't have the force of law behind them (except as to requestors), but they're cited by practitioners and compliance professionals as "official" guidance from the government. We're no exception; we rely on Releases all the time.

But there's a risk. Releases often contain too much information. Why? Because the Opinion Procedure Regulations in 28 CFR Part 80 say, among other things, that a request to the DOJ must contain all details of the transaction. So requestors throw in the kitchen sink.

Here's the problem. The kitchen sink usually shows up in the final Release, where "facts" are often called "representations." But representations (aka facts) aren't equivalent to "conditions," and not all representations are equal. The facts of one case will never be repeated entirely in another case, and facts important here may not even be relevant there. Again, however, because requestors are required by law to disclose all of their relevant facts, and because those facts are likely to be repeated in the final Release, the so-called representations simply accrete. They grow like barnacles from one Release to the next. That has happened most obviously with Releases dealing with promotional expenses, a phenomenon we've commented on before.

This accretion doesn't mean the DOJ is requiring or relying on each and every representation (aka fact) that appears in the Release. All it means is that the latest requestor had his or her own specific facts that had to be included in the request. That's the case with Release 08-03. TRACE, a non-profit, happens to have no pending business with the PRC government. That's a fact, not a requirement. And then there are other requestors who -- simply to be more persuasive -- load up their requests with lots of representations (aka facts) they've seen in earlier Releases. And so the barnacles grow.

However they appear, the representations (aka facts) in Releases shouldn't all be mistaken for requirements. That can only result in a view of the FCPA's affirmative defenses and exception that's too narrow.

Full post as published by The FCPA Blog on July 14, 2008 (boomark / email).