by Jonathan T. Howe, esq. | June 01, 2008

“For these packages to be admitted into our country, you need to pay me in U.S. dollars, $100 per box. Please put the cash in this envelope.” Most planners wouldn’t be approached so brazenly to grease the palm of a customs official -- but it could happen.

This is bribery, defined by Black’s Law Dictionary as “offering, giving, receiving or soliciting any item of value to influence the actions of an official or other person in the discharge of a public or legal duty.” And it is illegal.

One of the biggest recent cases took place in Kazakhstan, an oil-rich former member of the Soviet Union. A government official demanded that a U.S. company hire a certain consulting firm to usher a bid through a governmental process; the U.S. company also was asked to pay the consulting firm a 3 percent commission on profits earned on the business the company conducted in the country. Under duress, the U.S. company agreed to pay a 2 percent commission to the consulting firm.

Through a plea bargain, a fine of $44 million in civil and criminal penalties was levied against the U.S. company for agreeing to pay the bribe. If the case had gone to trial, that number might have been more than $70 million, and somebody might have gone to jail.

Risks and Reality

One constant complaint of planners is the inability to move materials through foreign customs and the difficulty of navigating the immigration process to get visas.

Increasingly, U.S.-based companies will hide behind a third party, usually based in the country where the event will be held, to “handle the situation.” This ploy poses substantial potential liability, especially with the Justice Department eager to prosecute transgressors via the Foreign Corruption Practices Act (FCPA).

Bribes come in many guises -- as gifts, contributions to “charities” and any other coercion used to ensure a favorable result. Often, such practices take the form of a gratuity for services rendered. As the FCPA allows for “expedition” and facilitation of routine activities and services such as paperwork to get licenses, etc., there must be a corrupt intent on the part of the party making the payment to satisfy the definition of bribery (the FCPA covers only payments to government officials, political parties or candidates for office).

Better Safe

One can turn to the Department of Justice for advice. In one such case, an association was unsure whether its offer to pay domestic expenses for a trip to the United States by six officials of a foreign government for an educational program would constitute a bribe to those officials.

The association was not offering to pay any expenses related to the travel to or from the States. The decision as to who would come on the trip would be made by the foreign government. The association would pick up the expenses to host just the officials and not their spouses or family members, and it would pay all costs directly to the providers of those services, not to any individuals. Certain gifts such as tote bags would be given but would be of nominal value.

The DOJ viewed the proposed expenses as reasonable under the circumstances. However, the agency is not so generous when the gross payments are made directly to an individual and not to a service provider.

In all cases in which you might be confronted with paying someone for something “unusual” that should be a simple matter, be sure you conduct a thorough review. Here, competent legal advice is not only worth the price, but it will be invaluable if it keeps you out of jail.

Jonathan T. Howe, Esq.,is a senior partner in the Chicago, St. Louis and Washington, D.C., law firm of Howe & Hutton Ltd., which specializes in meetings, travel and hospitality law. Legal questions can be e-mailed to him at [email protected].