The Department of Justice ("DOJ") has issued Opinion Procedure Release 08-02 allowing Halliburton Company ("Halliburton"), a U.S. issuer, to acquire a foreign target corporation with possible Foreign Corrupt Practices Act ("FCPA") violations without exposing itself to immediate FCPA liability.  The DOJ agreed to delay action for 180 days against Halliburton for possible FCPA violations incurred through the acquisition, contingent upon a rigorous post-closing plan requiring FCPA due diligence and disclosure.

In effect, this amounts to a preemptive deferred- or non-prosecution agreement between the DOJ and Halliburton, without the antecedent onus of a criminal investigation.  This opinion also suggests a willingness on the part of the DOJ to take a pragmatic approach when foreign laws restrict an acquiring company's ability to conduct FCPA due-diligence prior to an acquisition.  Although Halliburton will not immediately acquire the target company's liability under this agreement, the DOJ noted that the target company, its subsidiaries, and employees retain liability for past and future FCPA violations.

U.K. Bidding Process
Halliburton is involved in the U.K. bidding process to acquire a U.K.-based well management corporation.  Halliburton had limited ability to conduct meaningful pre-acquisition FCPA due diligence because of U.K. legal restrictions on disclosures during the bidding process.  Halliburton submitted a request for an opinion from the DOJ regarding post-acquisition FCPA liability.

Conditions of Agreement
Typically, an acquiring company is liable for unlawful payments made by the acquired company after the date of acquisition.  However, the DOJ agreed to suspend possible action against Halliburton for 180 days after acquisition, provided that Halliburton satisfy a "post-closing plan":

• Immediately after closing, Halliburton will disclose to the DOJ information related to FCPA violations made available to Halliburton;
• Within 10 business days, Halliburton will present to the DOJ an anti-corruption due diligence work plan.  This work plan will organize efforts into high, medium, and low risk areas.  Halliburton will complete high risk due diligence within 90 days, medium risk due diligence within 120 days, and low risk due diligence within 180 days;
• Halliburton will retain external counsel and third-party consultants to conduct due diligence;
• All agents of the acquired company must complete new contracts with anti-corruption provisions;
• Immediately after closing, Halliburton must institute its own Code of Business Conduct with anti-corruption policies and procedures; and
• Halliburton must disclose to the DOJ all FCPA and corruption issues that it discovers in the 180-day due diligence.

Unique Circumstances
The DOJ noted that this was a unique case because the U.K. bidding process does not allow Halliburton to conduct proper FCPA due diligence prior to acquisition.  In cases not facing such restrictions, the DOJ stated that it still expects thorough pre-acquisition FCPA due diligence.  The DOJ recognized Halliburton's interest in maintaining a competitive position in the bidding process, but discouraged companies seeking an FCPA Opinion Release in the future from agreeing to conditions that restrict the information that could be provided to the Department.

A copy of the DOJ's Opinion Procedure Release can be found below.

White & Case LLP's White Collar Practice Group will continue to provide updates regarding law enforcement's FCPA policies and practices.

Click here to read the complete DOJ Opinion Procedure Release.

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