May 30, 2019

May a company donate to a politician before whom the company has pending business?


An airport in the foreign city of Atlas is expanding, and is soliciting bids to build a new terminal.  The airport is owned by the city of Atlas.  The individual responsible for management of the airport (“Airport Manager”), including solicitation of bids for the terminal, is appointed by the mayor of Atlas.  It is an election year, and the mayor faces a stiff challenge from the rival political party.  Caesar Construction (“Caesar”) is a company with experience in building airport terminals.  Caesar will soon be submitting a bid for the terminal to the Airport Manager.  Caesar’s head of Public Affairs suggests that Caesar make a $50,000 contribution to the mayor’s political party, and that each of the five executive officers of Caesar personally donate $10,000 to the mayor’s political party.  The head of Public Affairs says that this donation will “buy a lot of goodwill” with the mayor’s office, and that the mayor is known to “look after his friends.”  Asked if it is legal in Atlas for a company and/or non-citizens to donate to a political campaign, the head of Public Affairs says it is a gray area of the law.  He says it is likely “technically” illegal, but it is well known that many companies in Atlas make political contributions, and none have been prosecuted.  

Key Considerations:

  • The FCPA not only prohibits corrupt payments to foreign government officials but also corrupt payments to candidates for foreign political office, foreign political parties, and foreign political party officials.
  • Although a violation of the FCPA requires the payor to intend a corrupt quid pro quo—a thing of value in exchange for some government action or purposeful inaction—such a corrupt exchange can be proven by circumstantial evidence.  Companies and executives should be cautious in making political contributions when the company has business pending before that politician or an agency the politician oversees.  Such a scenario could give rise to an inference of a corrupt bargain.  
  • A company should have and follow clear policies and procedures around political contributions.
  • A company should ensure that all political contributions are in compliance with local law.