Charitable Donations And Political Contributions

• Author: Robert W. Tarun
• Profession: Former Executive Assistant U.S. Attorney in Chicago
• Pages: 209-223

CHAPTER 7

Charitable Donations and

Political Contributions

I. INTRODUCTION

Charitable donation and political contribution corruption issues arise not infre-

quently for brand-name multinational companies because many engage in legiti-

mate social outreach and publicize their corporate generosity and good citizenship;

because they operate in challenging countries where charitable needs are many; and

to some degree, because they are perceived as having deep pockets. The U.S. Depart-

ment of Justice (DOJ) and the Securities and Exchange Commission’s (SEC) Resource

Guide to the U.S. Foreign Corrupt Practices Act makes clear that the “FCPA does not pro-

hibit charitable contributions or prevent corporations from acting as good corporate

citizens. Companies, however, cannot use the pretense of charitable contributions

as a way to funnel bribes to government officials.”1 With respect to charitable dona-

tions, the Resource Guide further identifies five questions multinational companies

should consider when making charitable payments in a foreign country, discussed

infra.2 The DOJ–SEC Resource Guide does not provide specific advice with respect to

political contributions.

Potential charitable and political payment risks are best minimized by means of

clear global corporate policies that govern local charitable and political campaign

activities, proper due diligence and funding controls, and a clear message to for-

eign country and financial managers that the company’s global policies relating

to charitable contributions and political donations will be strictly enforced. Many

companies benefit by requiring that all political donations and campaign contri-

butions above a certain threshold (e.g., $250) have advance written approval from

the parent compliance or law departments. With the notable exceptions of In re

Schering-Plough and United States v. Titan, discussed infra, the DOJ and SEC have

brought few FCPA charitable donation and political contribution cases. There

have also been few FCPA opinion releases in this area.

II. GLOBAL CORPORATE POLICIES AND LOCAL LAWS

In-country managers of foreign operations or subsidiaries are frequently approached

to make local charitable donations and political contributions. The first consider-

ation is whether the parent company has global charitable donation and political

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