What Is A Facilitation Payment?

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.

How are you managing your GDPR compliance requirements?

GDPR added a significant compliance burden on DPOs and data processors. Data breaches must be reported to the authorities within 72 hours, each new data processing activity needs to be documented and Data Protection Impact Assessments (DPIA) must be carried out for processing that is likely to result in a high risk to individuals. Penalties for breaching GDPR can reach into the tens of millions of Euros.

“In a world older and more complete than ours they move finished and complete, gifted with extensions of the senses we have lost or never attained, living by voices we shall never hear.”