From an FCPA compliance perspective, in determining what constitutes a bona fide business expenditure, a threshold determination needs to be made concerning whether a government official or unit of government can be paid or reimbursed for expenses that may be incurred.  In many countries, including the United States, limitations exist on what can be paid and, if so, how such payments are made.  Similarly, prior approval may also be required.

Care must be exercised in determining whether an expenditure is legitimate. Unnecessary diversions to resorts and travel upgrades to first class can be a cause for concern.   Expenditures for family members should always give rise to concern.  The analysis must be focused upon whether the expenditures in each situation are necessary business expenditures and, if so, whether what is paid is reasonable under the circumstances. An expenditure that is out of proportion or unrelated to a legitimate business purpose should serve as a basis for concern.

A variety of perspectives must be kept in mind when determining whether a bona fide expenditure is proper.   With the radical differences in living standards in various parts of the world, situations may arise where relatively modest expenditures can be viewed as improper inducements.  In those circumstances, there is a heightened need to be able to justify the legitimate basis for the expenditures that are made.  What might be viewed as customary practices in certain parts of the world are apt to be viewed as once-in-a-lifetime opportunities in other parts of the world.

Although not expressly required by the FCPA's anti-bribery provision, even good-faith offers to pay or reimburse reasonable expenses should be carefully documented and reviewed as part of an entity's compliance program.  The focus of any such determination is whether the expenditures are (1) reasonable in terms or purpose and amount; (2) made in good faith; and (3) relate directly to (a) the promotion, demonstration, or explanation of products or services or (b) the execution or performance of a contract with a foreign government or agency.

Whether the private sector is treated in the same way should not be a relevant consideration for what is reasonable.  Care needs to be exercised to ensure that practices deemed to be entirely appropriate for the private sector are not automatically extended to foreign officials.  For example, it may be an entity's practice to always fly prospective customers in first class as opposed to coach.  However, in certain contexts, an upgrade to first class could be perceived as sufficient to cause some foreign officials to be improperly influenced.  Even though it may be inconsistent with the normal way an entity treats potential customers, it may be necessary to have a different policy for foreign officials.