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FCPA Blog Daily News

Entries in Product Samples (1)

Monday
Sep292008

A Rare (Or Medium-Rare) Opportunity

Review Procedure Release No. 81-02 from December 11, 1981 may be a Cold War relic, but it's still relevant to the FCPA. It answers the question: How do you introduce new products to potential government customers in foreign countries without violating the Foreign Corrupt Practices Act? That's what Iowa Beef Packers, Inc. wanted to know when it knocked on the Justice Department's door in those early days of the FCPA.

The Packers, we'll call them, had a plan to promote sales of USA beef to the government of the Soviet Union. To whet the Bear's appetite, the idea was to send samples to officials at the Soviet Ministry of Foreign Trade, the government agency responsible for meat procurement. The samples (cuts unspecified) would amount to about 700 pounds, worth less than $2,000 in 1981, with no single sample package worth more than $250. The giveaways, the Packers said, could help them land sales to the the Soviet government of at least 40,000 pounds.

The Packers represented to the DOJ that the steaks were strictly for inspection, testing and sampling, and to make the Soviet officials aware of the quality of USA beef. The treats weren't intended for the officials' individual use, according to the Packers, but in their capacity as representatives of the agency responsible for buying beef. It's unclear how the meat would be kept off the officials' backyard barbies, but the Packers weren't worried. Anyway, the arrangement was transparent. The Packers said they'd informed the Soviet government about the goodies heading for the Ministry of Foreign Trade, a disclosure the folks at the Ministry couldn't have welcomed.

The DOJ liked what it herd (sorry, what it heard), and gave the thumbs up. "Based on all the facts and circumstances as represented by the requestor, the Department does not presently intend to take an enforcement action with respect to the furnishing of sample products as proposed by the requesting party."

The USSR is gone and the ex-Ministry-of-Foreign-Trade-officials-turned-oligarchs may now prefer Kobe Beef to USDA Prime. But Review Procedure Release No. 81-02 still has a lesson for companies wanting to send product samples to potential foreign government customers. Target the right agency, keep the amounts small, make sure (somehow) the products are intended for evaluation and testing and not for individual use, and be transparent in the host country. It may also help if your product goes well with potatoes -- baked, boiled, broiled or roasted.

View Review Procedure Release No. 81-02 (December 11, 1981) here.

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