Charitable donations and political contributions

• Author: Robert W. Tarun
• Pages: 145-156

CHAPTER 7

Charitable Donations and

Political Contributions

I. INTRODUCTION

There have been few Foreign Corrupt Practices Act charitable donation and politi-

cal contribution cases brought by the U.S. Department of Justice or the Securities

and Exchange Commission, with the notable exceptions of In re Schering Plough and

United States v. Titan, infra. There have also been few FCPA Opinion Releases in this

area. Still, donation and contribution issues arise not infrequently for brand-name

multinational companies because many 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. These potential risk areas are best minimized by clear global corporate

policies and a clear message to foreign managers that the company’s global poli-

cies govern any funding. Many companies benefit by requiring that all political

donations and campaign contributions above a certain amount (e.g., $500) have

advance written approval from the corporate law department.

II. GLOBAL CORPORATE POLICIES AND LOCAL LAWS

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

about making local charitable donations and political contributions. The first

consideration is whether the parent company has global charitable donation and

political contribution policies that govern such requests. Sometimes, foreign sub-

sidiaries are not familiar with the global policies; other times, their personnel see

U.S.–centric language, e.g., Political Action Committee (PAC), and interpret such

policies as applying only to U.S. operations. The second consideration is whether

local laws permit, prohibit, or cap charitable donations or political contributions.

With regard to this second consideration, the inquiry is not what local practice or

custom is, but what the written local law is. Assuming that a proposed donation or

contribution is both permitted by corporate policy and by written local law, the

third common and most critical consideration remains whether the contemplated

donation or contribution could be interpreted as having a corrupt motive. Obvi-

ously, a modest annual contribution to a local youth football organization team

will not pose an FCPA problem. However, a sizeable charitable donation urged by

a local government official can create a serious FCPA issue.

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