As the United States prepared to take a long holiday over the July 4th weekend, the Department of Justice set off some fireworks of its own: the department published a new edition of the FCPA Resource Guide, a one-volume compendium of all things related to the Foreign Corrupt Practices Act (FCPA). What does the Foreign… Read More
Facilitation payments are typically demanded by low-level and low-income officials. In some countries, it is customary to provide small unofficial payments, but the practice is illegal in most countries. Companies must communicate their facilitation payment-related policies as part of the reporting requirements on their compliance programs. Companies that do not transparently include facilitation payments in their reporting can be held legally accountable under the regulations that provide exceptions for such sums.
What are Facilitation Payments?
A facilitation payment is a small bribe known as a ‘grease payment’ or a ‘speed payment’ typically solicited to facilitate or expedite the performance of a routine transaction or service to which the person or company making the payment is legally entitled to receive.
What is the Difference Between Bribery and Facilitation Payments?
Facilitation payments are different from bribes in that they’re offered or solicited in return for a service a person or a company is entitled to receive. In contrast, bribes are offered in return for undue and illegal advantage.
What is an Example of a Facilitating Payment?
A facilitation payment can take many shapes and forms, such as cash, gifts, vouchers, tickets, etc. and are typically solicited in everyday transactions. Common examples are facilitation payments demanded at border crossings, where officials will hold up a company’s cargo from entering a market until they receive payment.
What Countries Allow Facilitation Payments and Why?
Despite the nuance in the definition of facilitation payments and bribes, both terms are closely intertwined and are recognized as a form of bribery that has led several countries and companies to adopt a zero-tolerance policy to both types of payments.
The US Foreign Corrupt Practices Act (FCPA) provides a narrow exception for facilitation payments. The exception applies only to payments made to foreign officials with the purpose to ‘facilitate or expedite routine governmental action’. The difference focuses on the purpose of the payment rather than on its value. Facilitation payments that are not properly documented may violate the FCPA’s accounting provisions.
Only three other countries make room for exceptions for facilitation payments in their legislation; these include, Australia, New Zealand, and South Korea. Nonetheless, omissions to facilitation payments only apply when the payments are made on foreign territory, yet remain illegal under domestic regulations.
Other anti-corruption legislation such as the UK Bribery Act and Sapin II categorically ban facilitation payments and define them as a form of bribery.