The US Department of Justice (DOJ) released an out of the ordinary FCPA opinion in response to “unusual and exigent circumstances…including the risk of imminent harm to the health and well-being of the individuals“, where the naval forces of an unnamed country detained the captain and crew of a maritime vessel owned by the US-based Company.
Companies considered a “domestic concern” are eligible to request an Opinion of the US Attorney General, regarding whether certain specified, prospective conduct conforms with the DOJ’s FCPA enforcement policy.
The US-based company is an operator of maritime vessels. On one of its journeys, one of its vessels was seeking to anchor in international waters while awaiting entry into the port of an unnamed country (referred to by the DOJ as “Country B”) for mandatory maintenance and renewal of technical maritime certificates.
When the vessel arrived in Country B, one of the Company’s shipping agents advised the captain that the Country B ports were fully occupied and the vessel would need to anchor outside of Country B for two weeks. The shipping agent gave incorrect anchoring coordinates to the captain, which led the captain to anchor in Country A’s waters inadvertently.
The Country A Navy intercepted the vessel and directed it into a Country A harbor, where the Country A Navy confiscated the vessel’s logbook and officers’ and crew’s documents and told the captain that he would be detained for questioning ashore, while the crew members and officers were ordered to remain on board the ship. Once onshore, the captain was detained in jail without being questioned or provided any documentation authorizing his arrest or detention.
An incident report by the Country A Navy notes that the vessel was in Country A waters in violation of various laws and treaties. The US Company 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.
Shortly following the detention of the captain onshore and of the crew onboard the
vessel, a third party purporting to act on behalf of the Country A Navy approached the US Company and demanded a financial payment to release the captain and to permit the crew and the vessel to leave Country A waters.
To engage with the third-party intermediary, the US Company retained the services of an agent with which the US Company was familiar from previous work and on which the US Company had recently conducted due diligence.
The US Company and its agent repeatedly asked the Third-Party Intermediary to provide a formal basis for the payment — such as an invoice or other documentation setting forth charges or an enumerated fine amount — to ensure that the payment would be made pursuant to a fine or other penalty resulting from a legal or regulatory violation, if any. This request was repeatedly rejected by the Third-Party Intermediary.
The US company additionally sought the assistance from other agencies within the U.S. government to end the captain’s detention and permit the vessel and its crew to leave Country A expeditiously.
The US Company also requested that those agencies notify relevant Country A authorities of the detention of the captain and crew, and the confiscation of the Requestor vessel.
None of those avenues bore fruit. Instead, the Third-Party Intermediary told the US Company and its Agent that to resolve the matter expeditiously and obtain the release of the captain,
the vessel, and the crew, the US Company needed to make a payment in cash of $175,000 to the Third-Party Intermediary imminently; otherwise the captain and the crew members would be detained for a longer period of time and the vessel would be seized.
Although the Third-Party Intermediary represented the payment to be an official payment
to the government of Country A, the nature of the demand and the manner of payment raised
concerns for the US Company that the payment was intended for one or more Country A government officials.
The DOJ found based on those facts that the proposed payment would not trigger an enforcement action under the anti-bribery provisions of the FCPA because the US Company would not be making the payment “corruptly” or to “obtain or retain business.”
In order to be considered a corrupt payment under the FCPA, the domestic concern would need to corruptly give or offer anything of value to any “foreign official” to assist “in obtaining or retaining business for or with, or directing business to, any person.” 15 U.S.C. § 78dd-2(a). “Corruptly” is defined as an intent or desire to wrongfully influence the recipient.
The facts presented by the US Company in this case demonstrated that the proposed payment would not be made with corrupt intent. The primary reason for the payment was to avoid imminent and potentially serious harm to the captain and the crew of the vessel.
Additionally, the US considers that “an individual who is forced to make payment on threat of injury or death would not be liable under the FCPA. Federal criminal law provides that actions taken under duress do not ordinarily constitute crimes.” United States v. Kozeny, 582 F. Supp. 2d 535, 540 n.31 (S.D.N.Y. 2008); and Crim. Div. of the U.S. Dept. of Justice and the Enf’t Div. of the U.S. Sec. and Exch. Comm’n, A Resource Guide to the U.S. Foreign Corrupt Practices Act 27 (2d ed. 2020)
Moreover, based upon the information provided, the payment is not motivated by an intent
to obtain or retain business, since the US Company had no ongoing or anticipated business with Country A, and the entire episode appears to be the result of an error, emanating from the incorrect advice received about where to anchor its ship while waiting for the port of Country B to carry out mandatory repairs.
In so doing, the DOJ found that the vessel may have inadvertently violated the laws of Country A, and perhaps other, regulations and laws governing shipping routes and anchoring locations. It is this error that triggered the payment demand by the Third-Party Intermediary.
But to its merit, rather than conceal the payment demand, the US Company engaged with various US government personnel and requested proper documentation from the Country A government setting forth the alleged violation and appropriate fine.
In contacting appropriate US government authorities in Country A in connection with the payment demand, the US Company acted in accordance with the recommendation in the FCPA Guide. (“If such a situation [of imminent threats to health or safety of its employees] arises, and to ensure the safety of its employees, companies should immediately contact the appropriate U.S. embassy for assistance.”).
Only when all reasonable efforts were exhausted and the US Company was told that the only
way to secure the safe and prompt release of the captain and crew was through a payment of
$175,000 in cash, did the Company consider making such payment and submit the FCPA Opinion.
Among other things, the US Company described the conditions of the captain’s detention, including the lack of medical treatment and medical equipment necessary to manage the captain’s serious medical condition, thus creating a serious and imminent threat to his health, safety, and well-being.
Put simply, the DOJ found:
- There was no sufficient business purpose associated with the payment
- There was a lack of a corrupt intent under the FCPA.
- The Company engaged with various US government personnel
- The US Company repeatedly asked for formal documentation for the payment
- The detention of the captain, created a serious and imminent threat to his health, safety, and well-being.
- The situation differs from other situations in which a company is threatened with severe economic or financial consequences in the absence of a payment.
The DOJ emphasized that the Opinion, is limited to an analysis of whether the payment at issue would trigger an enforcement action under the FCPA’s anti-bribery provisions. Beyond this narrow analysis, the Department offers no view on the permissibility or legality of the payment under any other laws, including the laws of Country A.