FCPA Opinion Release provides insight into the jurisdictional reach of the FCPA and the level of due diligence the DOJ expects.

On November 7, 2014, the US Department of Justice (DOJ) issued its second and final Foreign Corrupt Practices Act (FCPA) Opinion Release of the year, providing insight into the level of due diligence DOJ expects as part of international mergers and acquisitions. The Opinion Release also confirmed that pre-acquisition conduct by a foreign target company without a jurisdictional nexus to the United States would not be subject to FCPA enforcement. The Opinion Release is a reminder to US companies and issuers that effective due diligence and integration plans are critical to ensuring they do not become liable for improper conduct by their newly acquired companies after the acquisition is complete.

Overview of the Opinion Release –

DOJ issued FCPA Opinion Release 14-02 in response to an inquiry by a multinational consumer products company headquartered in the United States (the Requestor). During pre-acquisition due diligence into a foreign consumer products company and its subsidiary (collectively, the Target), the Requestor uncovered a number of likely improper payments to foreign officials, as well as substantial accounting and recordkeeping weaknesses. According to the Requestor, these potentially improper payments had no discernible jurisdictional nexus to the United States. As part of the pre-acquisition process, the Requestor set forth a remedial pre-acquisition and post-acquisition plan to address anti-corruption concerns. Based on these facts and circumstances, the Requester sought an opinion from DOJ that the government would not bring an FCPA enforcement action against the Requestor for the Target’s pre-acquisition conduct which, at the time of the conduct, did not have any jurisdictional nexus to the United States.