Thomas Doright, the expatriate heading up Phone and Build’s operations in Growastan, a Central Asian country, has submitted a bid on behalf of Phone and Build for a US $5 million dollar contract to provide telecom services and products for Growastan's Ministry of Communications.
Shortly after Thomas submitted the bid, Growastan’s deputy minister of communications asked Thomas to lunch. As they ate, the deputy minister proposed to Thomas: "If you can give me 100,000 US dollars in a bag within one week, the ministry will be able to award the project to Phone and Build. Thomas paused when he heard this: He knew that his yearly bonus was tied to his success in Growastan.
The deputy minister noticed the pause: "If you are uncomfortable paying me directly, you can give me a Maserati that I could use to pick up the winning contract. Alternatively, how about this? Why not donate $100,000 to my son’s political campaign?"
Thomas looked away from the deputy minister and said nothing. The deputy minister continued, "Did my administrative assistant explain to you how it works when the contracts are announced? You can pay the $1,000 expedited service fee if you want to hear the results of the bid one hour before they are made public."
After an awkward moment, the deputy minister continued, "Even if Phone and Build win the bid, without being 'more cooperative' it might take a long time for the company's equipment to clear customs."
Thomas was not sure what to do. When he returned from lunch, he discussed the conversation with his manager of operations, who is a local national. “You have to 'pay to play' in his country, that is just how it is," his manager explained.
What defenses might Phone and Build have if prosecuted for Foreign Corrupt Practices Act of 1977 violations?