The Business Purpose Test

Q: What is the business purpose test?

A: Ask yourself if the payment requested or offered is for the purpose of obtaining or retaining business or securing an improper advantage.

Said another way:

• Is the payment or offer of anything of value intended to assist in obtaining or retaining business?
• Is the payment or offer of anything of value intended to secure a business advantage?

Note:  Payments or gifts to encourage “goodwill” towards the company so that future requests to an official are expeditiously dealt with may violate the FCPA, even where the payments or gifts are not connected to a specific piece of business.

Examples:

• Directly or through a third party:
  • pay a customs employee to do one of the following:
    • change a duty in your favor
    • provide waiver of storage fees,
    • agree to not inspect shipment
    • improperly settle a dispute
    • not enforce legitimate fines
  • pay an employee of a government agency to grant a license or permits without having all necessary paperwork in order.
• Offer or provide a weekend vacation home for the summer or apartment rent to an employee of a state-owned or controlled company for him and his family to obtain or retain business.
• Provide lavish entertainment or gifts to employees of state-owned or controlled enterprises in the hope of future favors.