A wholly-owned subsidiary in the congo republic

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Hyde chemical Industries, A Delaware corporation, has established a wholly-owned subsidiary in the Congo Republic (CR). Under the CR's foreign investment laws, foreign invested companies are eligible to receive one of three designations: Level 1 for state-of-the-art technology, Lebel 2 for advanced technology, and Level 3 for high technology. Each designation carries a number of benefits. A Level 1 designation exempts the company from the CR's onerous environmental laws for a period of 20 years. Under the CR's laws, any foreign invested company can apply to the government for a review for a fee of $500,000.

Most companies that pay for the review obtain a technology designation. In 2003, Hyde donated $5 million to CR's environmental protection bureau in order to allow the bureau to purchase and install a new computer system. In 2004, Hyde applied for a review and received a Level 1 designation. Later that year, the Justice Department charged Hyde with a violation of the FCPA.

In its defense, Hyde argued that the donation was not for the purpose of obtaining new business. Hyde's plant was already established and Hyde had no intention of establishing any new businesses in the CR or in expanding its present operations. Does Hyde have a good argument? What other arguments would you suggest for Hyde?

Reference no: EM131136985

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