Facilitation payments - Written by on Friday, October 22, 2010 3:22 - 1 Comment

The Bribery Act, facilitation payments & the burning questions: Practical SFO guidance

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The question of small facilitation or so-called “grease payments” have attracted a lot of attention in the media and we have been hoping for some time that the mists would clear and the situation become less uncertain. That now appears to be happening.

Richard Alderman the Director
of the SFO recently addressed an audience on facilitation payments.

In that speech he acknowledged the difficulties and realities of doing business in many parts of the world and said he kept in mind that the US Foreign Corrupt Practices Act (FCPA) exempts small facilitation payments from criminal offences in certain circumstances.

That said, it is clear the SFO is adopting a harder line in relation to facilitation payments.  In some ways this mirrors what is actually happening in the US where such payments are increasingly frowned upon in practice.

Referencing an OECD statement issued at the end of 2009 which talked about the corrosive impact these payments have on societies Richard Alderman said this was “an important message to all of us”.

Rather than characterise the Director’s views we have quoted the salient extracts  emphasising certain elements: in bold.

“Let us be clear. Small facilitation payments are bribes and they are unlawful under our current law. That will not change and they will be unlawful under the Bribery Act.   Nevertheless, I have said in public that the chances of the SFO prosecuting a small (say $50) one off facilitation payment that is picked up and remedied by a corporate’s internal processes are remote. That does not mean though that corporates can decide that it is acceptable to have a number of so called one off payments provided that in total they do not exceed shall we say $20 million a year. That is certainly a view that has been put to me. I said that I strongly disagreed. I also said that I could not understand how payments amounting to $20 million a year could be regarded as small one off facilitation payments. They are a course of business that is approved by the corporate. The chances of a criminal investigation and prosecution, where that is company policy, would be high.

I have also been very much influenced here by gold standard corporates who tell me about their zero tolerance approach to facilitation payments. They say that it is possible to eradicate these, although it takes time and commitment from high levels in the corporate.

Nevertheless, after a while the message gets through and they develop a reputation in other countries for not getting involved in facilitation payments. This is something that other corporates should aspire to.

When we interviewed Vivian Robinson QC the General Counsel of the Serious Fraud Office at the end of September he said much the same thing.

The clear message is that the SFO expect companies to strive to stamp out the making of facilitation payments.  Richard Alderman has in the past said that he would expect organisations to adopt a zero tolerance approach, but as indicated above, potentially take a pragmatic view in relation to minor one off violations.

Our view is that organisations should do their very best to stamp out and prohibit the making of these payments.  This is what the SFO is telling everybody they expect organisations to do.  Organisations would be wise to listen carefully.  The SFO mean what they say.

Adopting a policy of blanket prohibition on facilitation payments is the way to go.

For the SFO “no” means “no”; the statute leaves them no option.

Image © Crown Copyright 2010

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Mar 17, 2011 9:14

What exactly do they define as facilitation payments though? This is not entirely clear from the Act. Are they going to elaborate in the Guidelines? Will they leave this to the judges to complete?

A lot of questions ensue from what are mere hardline statements and the procedure makes little sense.

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