Womble Bond Dickinson – Two recent FCPA actions—a DOJ Opinion letter and an SEC settlement—underscore key diligence questions to address when reviewing or approving payment of travel and hospitality-related expenses.
The opinion letter addressed a proposal by an agency facilitating international adoptions to pay for two Chinese government officials to travel to the United States for a five-day trip to complete the government’s inquiry into the agency; the DOJ stated this would not result in enforcement action provided certain criteria were met. The SEC settlement involved providing Chinese government officials with over 24 trips at a cost of close to $1 million to attend educational events and conferences, which the SEC maintains were simply pretexts to allow the Chinese officials to partake in luxury tourism; this led to $6.5 million in penalties and disgorgement to settle. These different outcomes highlight the difference between bona fide expenditures related to the promotion, demonstration, or explanation of a company’s products or services, and the corrupt intent required to trigger FCPA enforcement.
Source:
- Womble Bond Dickinson: Handle with Care: FCPA Travel & Hospitality Expenses
