A facilitation payment is a contentious type of payment, as it can sometimes constitute a bribe. The UK Bribery Act 2010 considers a facilitation payment to be a form of bribery, this is because it is a payment to a foreign public or government official with the intention to persuade them to expedite an administrative process to benefit the bribing party. However, Australia and America do not consider facilitation payments to be corrupt in nature. Considering the UK Bribery Act does class a facilitation payment as a bribe, it is essential for an organisation to know when facilitation payments cannot be used.

Which situations do facilitation payments occur within?

The Organisation for Economic Co-Operation and Development (OECD) in its 2009 Recommendation for Further Combating Foreign Bribery, adopted a negative stance towards facilitation payments, suggesting that member countries should avoid facilitation payments. The OECD stated that facilitation payments had a negative effect upon economies and actually demonstrate illegal conduct in the countries which they are formulated within. The UK, in its Bribery Act 2010, incorporated the OECD guidance and therefore it does not include an exemption to allow facilitation payments.

The UK Serious Fraud Office (SFO) considers a facilitation payment to be a form of bribery. Therefore, whether the SFO will prosecute in respect of a facilitation payment is dependent upon the joint prosecution guidance of the Director of the SFO and the Director of Public Prosecutions on the Bribery Act 2010. Richard Alderman, SFO director, stated that he did not expect facilitation payments to cease immediately following the new legislation, but Alderman did say that hopefully the 2010 act will provide the necessary legislative force to put an end to facilitation payments in the future.

The reference to adequate procedures in the Bribery Act 2010 is of importance to facilitation payments too, as it is expected that if an organisation has adequate procedures in place then they will be able to put an end to facilitation payments.

Small, unofficial payments to foreign or public officials can be customary and legal in certain countries. For example, in Australia, since 2006 their legislation has deemed facilitation payments as a payment of nominal value, to a foreign official to expediate minor routine action and is subsequently documented. Therefore, facilitation payments can occur under Australian law, but only if the organisation can prove that the benefit was “minor in value” and “offered for the sole or dominant purpose of expediting or securing performance of a routine government action of a minor nature,” according to the Criminal Code. However, the controversial nature of facilitation payments has encouraged some Australian states to override the federal legislation and deem facilitation payments as illegal and a form of bribery.

With regards to the United States, the Foreign Corrupt Practices Act (FCPA) 1977 considers facilitation payments, which are also referred to as “grease payments,” to be payments intended only to affect an official’s actions for timing reasons, not to influence the outcome of the routine. Ultimately, facilitation payments are one of the few exemptions in the FCPA. Facilitation payments have become an exemption due to representatives of the US claiming that organisations can’t do business as easily with particular countries, if they can’t offer facilitation payments to low-level bureaucrats. Recently, there seems to have been a shift in opinion over the exemption of facilitation payments in the FCPA, as there has been a call to remove the exemption. This seems to have occurred due to the increasing number of legislations which do not include an exemption for facilitation payments, such as the UK’s Bribery Act 2010, as it has instigated a debate at international anticorruption conferences. Moreover, the OECD’s Working Group on Bribery and its senior officials have lobbied US representatives regarding the facilitation payment exemption, voicing their negative perception of such payments.

If an organisation wants to remain compliant with the UK Bribery Act, then it would be wise to conduct some training and well-formed knowledge regarding when facilitation payments can be used, and when they cannot be used.

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Bribery in the workplace involves an employee or associated person accepting or issuing a bribe in order to gain a business advantage for either themselves or their organisation. The Bribery Act 2010 references bribery and corruption in the workplace in Section 7, which states that an employee and the organisation can be held accountable for a bribery offence in the workplace. However, an organisation will be protected against the bribery offence if they can demonstrate that adequate procedures were implemented to protect against bribery and corruption. Consequently, employees and employers need to have a thorough understanding of the Bribery Act 2010.
How can bribery take place in the workplace?
Bribery is common in the workplace, this is because it can be used by individuals to achieve targets and business deals, which they might not be able to achieve through normal business conduct. Bribery becomes more frequent within situations of intense pressure, if an individual needs to complete something quickly, they might offer a bribe in order to speed the process along. This is not honest or fair business ethics, and therefore the Bribery Act 2010 has become the necessary legal force to crackdown on bribery and corruption within the workplace.
Bribery within government organisations tends to be more highly publicised as government officials are considered to hold positions of trust, and therefore if they accept a bribe, they are compromising the trust of many people, perhaps a whole country. Accordingly, if a government official is bribed, then it is considered to be a matter of public interest.
In April 2018 Ernst & Young published a report which stated that 34% of executives within UK businesses believe that bribery offences and corruption takes place regularly within their organisation, this is a rise from 20% in 2012. The UK’s percentage is higher than the rest of Western Europe, where 21% seem to believe that corruption happens extensively. In response to these worrying conclusions, the global fraud investigation leader for Ernst & Young, Andrew Gordon, stressed that there now needs to be a stronger commitment to stopping corruption and bribery.
Evidently, since 2012 there has been a rise in the rate of bribery and corruption, which is worrying for the future of the business sector. Since 2012, the UK’s Serious Fraud Office (SFO) and the US’ Securities and Exchange Commission (SEC) have distributed £7.9 billion worth of penalties for the crimes committed. This does demonstrate that bribery and corruption offences are not left unpunished, and perhaps the rising rate of offences is due to the stricter anti-bribery and corruption legislation, such as the UK Bribery Act 2010, which has issued a crackdown on offences.

What are the consequences of bribery in the workplace?
The consequences of bribery in the workplace can be severe for both the individual and the organisation involved. Under Section 7 of the UK Bribery Act 2010, companies are held liable for corruption if there is no evidence that they had implemented adequate procedures to protect the workplace against corruption and bribery. Therefore, if an employee or associated person conducts a bribery offence, then the responsible individual and the organisation could be issued with an unlimited fine.
For example, in May 2018 the SFO filed a case against Chadian Officials and Griffiths Energy, an oil company based in Calgary, for their corrupt handling of oil, meaning the SFO received £4.4 million. This case represents the first time that the SFO has issued a fine, and received the money, from an international civil recovery case. Griffiths Energy were accused of bribing Chadian Officials with discounted business deals and eventually, Griffiths Energy pleaded guilty to “bribes intended to illegally secure commercial interests in Chad.”
If an organisation wishes to protect themselves against bribery charges and investigation, then they need to implement adequate procedures, which will demonstrate an organisation’s compliance with the Bribery Act 2010. An organisation will then need to ensure that these adequate procedures are well communicated around the business, ensuring all employees and associated persons are aware of the procedures and are well trained in them.

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An individual or organisation guilty of a bribery or corruption offence will be subject to Section 11 of the UK Bribery Act 2010. Section 11 stipulates the penalties for bribery and corruption offences, which increase in severity according to the scale of the offence. Therefore, to avoid crippling fines, prison sentences and reputational damage, it is wise to comply with the UK Bribery Act 2010. 

The Bribery Act Penalties:

The UK Bribery Act 2010 states that the penalties inflicted upon an individual who commits a bribery offence are:

1) The penalty of imprisonment up to 10 years, this prison sentence will be decided regarding the severity of the bribery offence.

2) The penalty of a fine. This can be unlimited, and therefore will be higher regarding the severity of the bribery offence.

If an organisation has allowed a bribery offence to occur due to in-sufficient procedures being in place, then the UK Bribery Act 2010 states that the penalties which will be inflicted upon the organisation are:

1) An organisation will face an unlimited fine, and this fine tends to be higher than the fine inflicted upon individuals, due to the size of corporations.

2) The organisation will be told to implement serious crime prevention orders, to ensure that bribery offences do not occur in the future. Serious crime prevention orders will include how an organisation conducts their finances, to ensure no doctoring of finances can occur.

3) The Proceeds of Crime Act 2002 states that any financial gain which the organisation received through the bribery offence, must be returned.

4) Disqualification of an organisation’s directors will also occur, as there has been a demonstration of a lack of top-level commitment (one of the adequate procedures which should be implemented). Thus, directors can be disqualified from holding the position as director for up to 15 years.

How else will organisations be affected by bribery offences beyond the official penalties of the UK Bribery Act 2010?

If an organisation has allowed bribery and corruption to take place, it suggests that they have not implemented the adequate procedures stated in the UK Bribery Act 2010. Therefore, there will be more repercussions for an organisation than just the penalties set out in the UK Bribery Act.

1) Damage to the organisation’s reputation. If an organisation is found to be guilty of allowing a bribery offence to occur, then clients and other organisations will be less inclined to work with this particular organisation.

2) In turn, this will create a loss of revenue if fewer organisations are willing to co-operate and invest in the organisation.

3) Lots of money will be spent in legal fees during an organisation’s attempt to prove their honesty regarding the case against them. Therefore, this emphasises how important it is for organisations to implement adequate procedures in order to avoid bribery cases against them.

4) The ability of a bribery offence to tarnish an organisation will inevitably lead to a loss of morale within the organisation, reducing the work ethic and output.

Skansen Interiors Limited are an example of an organisation which suffered the repercussions of a bribery offence. Skansen offered a bribe to an employee of DTZ Debenham Tue Leung (DTZ) worth £10,000, allowing Skansen to win a vital business contract. A newly appointed CEO to Skansen in 2014 highlighted concerns regarding the payments which were being issued to DTZ. Following this, the CEO conducted an internal investigation which included the implementation of new anti-bribery and corruption policies. However, the police and SFO did not regard the new anti-corruption policies to be sufficient, as the bribery offence had already taken place. Consequently, Skansen was faced with charge of a bribery offence, despite Skansen claiming that adequate procedures were now in place. The UK jury filed against this case and stated that the procedures which had been implemented were not adequate in order to prevent bribery. Now, Skansen have been convicted for a bribery offence and will ultimately face the stated penalties in the UK Bribery Act 2010.

The penalties inflicted upon organisations and individuals for allowing bribery and corruption to occur, can be severe. Therefore, the necessary steps to prevent bribery and corruption need to be conducted by both individuals and organisations.

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The bribery of a foreign public official is a serious crime in anti-bribery and corruption legislation, stated in Section 6 of the UK Bribery Act 2010. A foreign public official works on behalf of a foreign government, and therefore has access to vital information. Consequently, if a foreign public official is bribed, there are severe repercussions in the form of imprisonment and unlimited fines. Therefore, to avoid the penalties stated in the UK Bribery Act 2010, compliance with this legislation is essential.

Who are foreign public officials?

Ultimately, a foreign public official is an individual who acts on behalf of a foreign government. The UK Bribery Act 2010 deals with the bribery of both government officials and commercial officials. The UK Bribery Act lowers the threshold needed to identify whether bribery has taken place with a foreign public official in comparison to commercial bribery, because bribery of a foreign public official is considered to be a serious crime and therefore there needs to be tighter restrictions.

There is a degree of confusion surrounding who constitutes a foreign public official and therefore the Serious Fraud Office (SFO) have published some guidelines to offer organisations a clear approach to their conduct with foreign public officials. The SFO former Fraud Chief Richard Alderman produced a statement on behalf of the SFO which stated that when dealing with the conduct of a foreign public official, the SFO “are not looking for improper inducement, but an attempt to influence.”

The Organisation for Economic Co-operation and Development (OECD) convention published a test which can be used by an organisation to clarify whether a foreign public official is legitimate or not. This OECD test works upon the basis of whether the foreign state is in a position to influence the foreign organisation which is in question. The purpose of this test is to establish whether the organisation is being influenced and ran by the State, which has serious implications regarding bribery and corruption.

How to prevent bribery of foreign public officials?

The UK Bribery Act states that adequate procedures should be implemented by organisations to demonstrate that they have attempted to prevent the bribery of a foreign public official. The stated adequate procedures are:

– Proportionate Procedures. The procedures which an organisation puts into place should reflect the scale of the risk which the organisation could face, therefore the procedures are proportionate to the risk.

– Top-level Commitment. This refers to individuals higher up within the organisation, as it is intended that they demonstrate their commitment to anti-bribery and corruption legislation.

– Risk Assessment. A risk assessment must be conducted by an organisation regularly to analyse and find out how potential risks to an organisation’s integrity could occur.

– Due Diligence. These procedures should be conducted in relation to the individuals who will be performing on behalf of the organisation.

– Communication. An organisation is expected to communicate the adequate procedures to all members of the organisation, as well as conducting training.

– Monitoring and Review. As time goes on the employees and personnel of an organisation will change, therefore updates and reviews of adequate procedures need to be conducted to ensure they are all in line with the organisation and potential risk.

It is advised that commercial organisations have a code of conduct which consist of the adequate procedures above. Therefore, if a bribery offence does take place within an organisation, then the adequate procedures will demonstrate that the organisation has attempted to prevent bribery appropriately.

What are the consequences of failing to prevent bribery of a foreign public official?

Due to Section 7 of the UK Bribery Act 2010 the “broad and innovatory offence” of the failure of commercial organisations to prevent bribery has been established. An organisation is now held responsible for any bribery offence or corruption which occurs within their organisation, if there has been no demonstration of adequate procedures implemented in attempt to prevent bribery from occurring. `

In July 2018 there was heightened controversy surrounding the Australian government and the bribery of foreign public officials by the Australian consulting firm Sinclair Knight Merz (SKM). SKM were found to be bribing foreign public officials in Vietnam, the Australian government became implicated in this bribery due to SKM being a significant contributor to the government’s foreign aid programme. SKM were found guilty of bribing Vietnamese public officials in order to secure work on aid projects from 2006-2011.

This is a demonstration of how bribery of foreign public officials can occur, and therefore the necessary measures taken to expose when this bribery has taken place and to prevent against it, is important.

Section 7 of the UK Bribery Act 2010 holds organisations accountable for bribery and corruption offences which occur within the organisation. Therefore, to avoid the penalties which could be imposed upon an organisation, adequate procedures and steps to identify if a bribery offence has occurred, must be conducted.

What steps can be taken to identify a bribery offence?

The UK Bribery Act 2010 states that a bribery offence can assume 4 forms:

1) Section 1 of the Bribery Act-The offence of offering a bribe

2) Section 2 of the Bribery Act- The offence of accepting a bribe

3) Section 6 of the Bribery Act- The offence of bribing a foreign public official

4) Section 7 of the Bribery Act- The offence of an organisation failing to prevent bribery by those who work on their behalf

Section 7 of the UK Bribery Act is perhaps the most contentious, as it establishes company liability for a bribery offence which has been conducted by an employee or associated person. Therefore, organisations are now required to identify when a bribery offence has been committed, to protect the organisation against potential fines.

If an employee or associated person has committed a bribery offence, then the organisation initially needs to decide how that individual is related to the company. Section 8 of the UK Bribery Act defines an “associated person” as an individual which performs services on behalf of an organisation. Therefore, third parties and agents, such as consultants, sub-contractors and advisers, are included in the scope of associated persons. An organisation which is in contact with these associated persons is subsequently liable for any corrupt offences which a third-party member might conduct. Consequently, an organisation should carefully choose which third parties they are going to employ.

The Red Flags which can help you to identify corrupt behaviour:

1) Evidence of an employee/ associated person purchasing unusual items on behalf of the company. This sort of behaviour could suggest that an employee and a client of the company are engaging in an usual relationship, especially if there is a large quantity of an item ordered which is unnecessary for the company.

2) The acceptance of poor quality items, which the organisation would not tolerate. If an employee is still allowing the purchasing of such items, it might suggest that a corrupt deal has been arranged between the employee and the supplier.

3) Invoices can expose strange behaviour, therefore an organisation should monitor invoices to check if there is a pattern of unusual invoices. Unusual invoices will be un-flagged and unprofessional, which would suggest they are being used for illegitimate means.

4) If an employee appears to be pushing for a particular transaction or seems unusually invested in a particular business deal, then it suggests that they have a conflict of interest.

5) Expenses can be monitored to expose corrupt activity. If an employee has offered unusual and incomplete travel forms and expenses, then it could be discovered that the individual is using the money from these expenses for improper means.

6) Associated persons pose a high risk to organisations, therefore associated persons and third parties must be analysed for signs of corruption or unusual conduct.

What happens if your organisation doesn’t identify that a bribery offence has been committed?

If an organisation cannot demonstrate that adequate procedures were in place, then they will be subject to an unlimited fine. Furthermore, the organisation might have to consider that the proceeds of its criminal conduct can be confiscated under the UK Proceeds of Crime Act 2002. If the bribery offence which has occurred is severe, then an organisation could also be subject to automatic debarment under the EU Public Procurement Regulation 2004/18/EC.

In July 2018 a US and UK bribery and corruption investigation of Glencore, the Anglo-Swiss multinational commodity trading and mining company, took place. UK authorities began to investigate the corrupt activity of Glencore, with specific investigation into Glencore’s conduct with Israeli billionaire Dan Gertler and the leader of the Democratic Republic of Congo. The Serious Fraud Office (SFO) have lobbied to conduct a full investigation into Glencore’s dealings in the Democratic Republic of Congo. Glencore is based in Switzerland, yet the organisation’s shares are traded in London, therefore the SFO have the right to conduct an investigation. Peter Jones, Senior Researcher/Campaigner for Global Witness, regards the SFO’s involvement in the Glencore investigation as a positive push forward to keep UK-listed corporations responsible for their business overseas. The concerted efforts by UK and US authorities demonstrates the commitment to preventing corruption and bribery in the business sector.

If an organisation can identify a bribery offence before it is too late, then it will be beneficial in the long term. Therefore, knowledge of how to conduct the necessary investigations to uncover corruption in an organisation is vital.

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Bribery and corruption has been increasing across the business sector since the beginning of the twenty-first century. Consequently, the Organisation for Economic Co-operation and Development (OECD), the UK Ministry of Justice, the Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act 2010 have instigated a commitment to putting an end to bribery and corruption. Therefore, there is now more guidance than ever to help individuals and businesses to avoid bribery and corruption.
How can implementing adequate procedures allow an organisation to avoid bribery and corruption?
The UK Bribery Act 2010 introduces “adequate procedures” in Section 9, these procedures aim to defend organisations against corruption and to offer guidance on how to avoid bribery and corruption.
The Ministry of Justice has published guidance to demonstrate that the implementation of adequate procedures can help an organisation to avoid bribery and corruption in the workplace. Therefore, if an organisation successfully implements adequate procedures into their organisation, then they should be able to avoid bribery and corruption.
Adequate Procedures:
1) Proportionate Procedures. An organisation should implement procedures which are proportionate to the types of risks which could affect the organisation. Thus, factors such as the size of the company and the industry in which the company rests, will affect the type of corruption risk. Consequently, procedures need to take this in to consideration.
2) Top-Level Commitment. The employees and associated persons within an organisation will only commit to anti-bribery and corruption policies seriously, if the board of directors commit to the policies as well. Therefore, there needs to be a demonstration from individuals at the top of an organisation to prove that bribery and corruption is not tolerated within their organisation.
3) Risk Assessment. An organisation needs to conduct a risk assessment across the organisation to identify where corruption may take place and why. As a result, an organisation will be able to identify the external and internal risks which they need to tackle.
4) Due Diligence. It is recommended that an organisation conducts a proportionate and risk-based approach to due diligence, and as a result this will allow the organisation to understand explicitly the individuals which they are dealing with. The Bribery Act states that organisations will be held liable for corruption conducted by associated persons, therefore the organisation needs to be aware of every single person they are conducting business with.
5) Communication. An organisation needs to ensure that all employees and associated persons understand and are aware of the anti-bribery and corruption policies in their organisation. This can be achieved through circulating the policies around the organisation through documentation, and also through offering training to the employees, to allow them to understand the policies.
6) Monitoring and Review. An organisation and its personnel are constantly changing, and therefore the types of risks which could affect the organisation will also be constantly changing. Thus, an organisation needs to review their anti-bribery and corruption policies to ensure that they are still effective.

What further steps can be taken to avoid bribery and corruption?
Avoiding bribery is the essential task of an individual and an organisation, if they want to avoid the penalties of the UK Bribery Act 2010. Therefore, an organisation needs to implement a robust anti-bribery and corruption policy in the workplace, and subsequently, there needs to be a commitment to this policy from all employees and associated persons.
Asian Development Bank (ADB) have demonstrated a commitment to anti-bribery and corruption within the business sector, which has allowed them to effectively avoid bribery at any cost. Initially, in ADB’s commitment to avoiding bribery, they published their corruption policies around the organisation. In effect, this is a demonstration of ADB complying to the adequate procedure “communication,” as the policy is being well communicated to employees. ADB even worked with the OECD to create the “Anti-Corruption Initiative for Asia and the Pacific.”
Following the implementation of adequate procedures, ADB has demonstrated a commitment to investigating all of its employees and associated persons, including third-parties and agents, to remove any form of corruption from the organisation’s contacts. In 2012 ADB recorded that they had removed 42 companies and 38 individuals from their organisation, by 2014 this had decreased to removing 31 companies and 30 individuals. This demonstrates ADB’s commitment to the adequate procedure “monitoring and review,” as they have re-investigated all associated persons to decide whether their conduct is in line with the organisation or not.
Clare Wee, leader of ADB’s anti-corruption and integrity office, has highlighted ADB’s commitment to noticing the red flags when they arise, allowing ADB to crackdown on any corrupt activity which has taken place.
Avoiding bribery and corruption is essential, therefore organisations and individuals should utilise the guidelines and advice that has been created to ensure that they are not liable for any offences.

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Politically Exposed Persons (PEP’s) can be identified as individuals who are currently, or have previously been, in a position which holds a public function and involves vast responsibility due to their access to state information. Consequently, PEP’s are ideal targets for bribery and corruption, because they have vital information and funds to offer. Consequently, if an organisation is going to communicate and conduct business with a PEP, then they need to do so fairly and lawfully, through complying with the UK Bribery Act.

How can PEP’s be a risk to organisational integrity?

PEP’s can pose a risk to organisations through bribery, corruption and money laundering. Therefore, restrictions need to be placed upon PEPs in order to monitor their behaviour in an organisation. The Dow Jones Watchlist created a list of roles which can be expected to involve risk, and this list included:

– Heads of state/national/regional government.

– Senior members of the armed forces.

– Political pressure group officials.

– Senior members of the police services.

PEP’s are very controversial; therefore, they are subject to tighter controls and regulations within organisations. The Sommet Evian Summit in 2003, which was conducted by G8 Member Nations, including the UK and the US, voted in favour of the Organisation for Economic Co-operation and Development’s (OECD) decision to place controls over the due diligence of PEP’s. These tighter controls were established to monitor the financial processing conducted by PEP’s, which in the past has been corrupt.

The controversial nature of PEP’s was heightened following the 2016 incident involving finance minister Pravin Gordhan and the Gupta family, who were involved with Oakbay Investments. The Gupta family claimed to be victims of a political campaign, which involved Gordhan being forced by the Guptas to intervene in the closure of Gupta owned business bank accounts. This enforces the importance of due diligence to protect the integrity of an organisation from the involvement of PEP’s.

To prevent PEP’s posing a risk to your organisation and reputation, investigation of PEP’s and implementation of anti-bribery and corruption policies need to be in place. Rudi Kruger, manager at Risk Solutions at LexisNexis South Africa, stated that PEP’s are risky individuals to employ due to them posing a risk of “money laundering, bribery and corruption due to their position and influence.” The Money Laundering Regulations 2007 implemented the requirement of enhanced due diligence to deal with PEP’s, notably outside of the UK, to ensure they are monitored correctly.

Another recent bribery scandal in March 2018 involved two former Greek Prime Ministers and an EU Commissioner, who were apparently bribed by Novartis, a Swiss medical giant, from 2006-2015. Novartis were investigated for bribing officials regarding drug prices and sales to hospitals, these bribes eventually totalled up to over €10 million.

If an organisation wants to achieve fair and lawful business relations with PEP’s, then organisations need to ensure they remain compliant with the UK Bribery Act, Money Laundering Regulations 2007 and the OECD regulations.