On October 6, the Department of Commerce, Bureau of Industry and Security (BIS) published a Notice of Inquiry in the Federal Register requesting comments from small and medium enterprises (SMEs) about their “understanding of and compliance with export controls maintained pursuant to the Export Administration Regulations (EAR).
SMEs will now have an opportunity to offer comments and concerns about the EAR’s administration and enforcement against the backdrop of the President’s National Export Initiative (NEI) which calls for U.S. companies to double exports over the next 5 years.
BIS expects the input will “help it administer and enforce export controls in a manner consistent with U.S. national security” while potentially increasing exports from SMEs. All exporting companies favor and support predictability. SMEs particularly need predictability as they begin to slowly emerge from the depths of the Great Recession.
Continuing outreach efforts and programs like The Export Legal Assistance Network, www.exportlegal.org, can assist exporting companies to understand and comply with their obligations under the EAR. When compliance falls short, consistent enforcement and predictability of penalties would be of great benefit, particularly since the maximum administrative civil penalty level is $250,000 per violation. Perhaps a penalty regime similar to the Administrative Monetary Penalty System (AMPS) used by the Canada Border Services Agency (CBSA) can be adopted for SMEs. Or perhaps BIS can issue warnings, without a monetary penalty, for first-time offenders when a violation of the EAR occurred during a prior time when management was not fully appreciative of the need for compliance or the company did not have the resources to implement a more robust compliance program.
The Notice of Inquiry should cause SMEs to feel empowered to "speak" to BIS on these important issues, whether through trade associations, chambers of commerce, or as single companies.
Comments to BIS are due by December 6, 2010. They should be identified in the subject line as "Notice of Inquiry—SME," and can be delivered by e-mail at publiccomments@bis.doc.gov. Comments can also be faxed to +1.202.482.3355. When faxing, please call the Regulatory Policy Division, at +1.202.482.2440. Comments can also be mailed or sent by courier to: Sheila Quarterman, U.S. Department of Commerce, Bureau of Industry and Security, Office of Exporter Services, Regulatory Policy Division, 14th Street & Pennsylvania Avenue, NW., Room 2705, Washington, DC 20230, Attn: "Notice of Inquiry—SME."
25 October 2010
03 October 2010
Consultant Representing Foreign Government not “Public Official” Under FCPA
The Department of Justice (DOJ) has issued its third Foreign Corrupt Practices Act Opinion Procedure Release this year. In 2009, the DOJ only issued one Opinion Procedure Release.
The Requestor was a U.S. limited partnership involved in development of natural resources trading and infrastructure. The Requestor was interested in working with a foreign government regarding an approach to particular natural resources infrastructure development. Because the approach was relatively new and the market is dominated by a group of the well-established companies, the Requestor decided it required assistance when entering into discussions with the foreign government.
The Requestor wanted to contract with a Consultant and its sole owner to assist it. The Consultant is a U.S. partnership and an agent of a foreign government, registered under the Foreign Agents Registration Act (FARA). The Consultant has extensive business contacts in the foreign country, and has represented the foreign government before. The Consultant was to be paid a signing bonus by the Requestor at the time the consulting agreement was signed, but the major payment to the Consultant would be in the form of success fee.
Because the Consultant had already represented the foreign government, and because it would continue representing the government at the same time as working with the Requestor, precautionary measures were taken to avoid a conflict of interest between the Consultant’s representation of the Requestor and the Consultant’s independent representation of the foreign government. While consulting for the Requestor, the Consultant’s duties would be limited to the terms of the proposed contract between them.
The DOJ stated that it would not be taking any enforcement action against the Requestor because of the payments made to the Consultant. Even though the Consultant was an agent of the foreign government, because local law permitted the relationship and the Consultant took precautionary steps to avoid the full disclosure of the relationship to the relevant parties, it was determined that the Consultant would not be acting on behalf of the foreign government. Accordingly, the Consultant was not a “foreign official” as defined by the FCPA. The DOJ also made clear that if a violation of the FCPA occurred during the performance of the consultancy, it reserved the right to enforce the law, regardless of the Opinion.
At a time of increased enforcement and ongoing investigations, this Opinion Procedure shows that companies must carefully consider and screen their business dealings that bring them into contact with foreign governments, whether those contacts are direct or indirect. It also shows that in addition to a robust compliance program, publicly-traded and privately-held companies can use proper planning to avoid potential FCPA violations and the severe civil and criminal penalties that can follow.
The Requestor was a U.S. limited partnership involved in development of natural resources trading and infrastructure. The Requestor was interested in working with a foreign government regarding an approach to particular natural resources infrastructure development. Because the approach was relatively new and the market is dominated by a group of the well-established companies, the Requestor decided it required assistance when entering into discussions with the foreign government.
The Requestor wanted to contract with a Consultant and its sole owner to assist it. The Consultant is a U.S. partnership and an agent of a foreign government, registered under the Foreign Agents Registration Act (FARA). The Consultant has extensive business contacts in the foreign country, and has represented the foreign government before. The Consultant was to be paid a signing bonus by the Requestor at the time the consulting agreement was signed, but the major payment to the Consultant would be in the form of success fee.
Because the Consultant had already represented the foreign government, and because it would continue representing the government at the same time as working with the Requestor, precautionary measures were taken to avoid a conflict of interest between the Consultant’s representation of the Requestor and the Consultant’s independent representation of the foreign government. While consulting for the Requestor, the Consultant’s duties would be limited to the terms of the proposed contract between them.
The DOJ stated that it would not be taking any enforcement action against the Requestor because of the payments made to the Consultant. Even though the Consultant was an agent of the foreign government, because local law permitted the relationship and the Consultant took precautionary steps to avoid the full disclosure of the relationship to the relevant parties, it was determined that the Consultant would not be acting on behalf of the foreign government. Accordingly, the Consultant was not a “foreign official” as defined by the FCPA. The DOJ also made clear that if a violation of the FCPA occurred during the performance of the consultancy, it reserved the right to enforce the law, regardless of the Opinion.
At a time of increased enforcement and ongoing investigations, this Opinion Procedure shows that companies must carefully consider and screen their business dealings that bring them into contact with foreign governments, whether those contacts are direct or indirect. It also shows that in addition to a robust compliance program, publicly-traded and privately-held companies can use proper planning to avoid potential FCPA violations and the severe civil and criminal penalties that can follow.
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