Charitable donations and political contributions

AuthorRobert W. Tarun
Pages145-156
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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