Facilitating Payments: For Whom the Bell Tolls

 The U.K. Bribery Act of 2010 has no facilitating payments exception. And after Wal-Mart de Mexico, I wonder if the FCPA won’t either.

On Tuesday, I wrote about the application of the facilitation payments exception to this case. On its face, the statute permits payments to speed up the issuance of routine permits, and many of Wal-Mart de Mexico’s alleged payments appear to fit this description.

But commentators have long suggested that in practice, the enforcement agencies have narrowed this exception almost to the point of nonexistence — see here or here. Meanwhile, activists and international organizations have long derided the exception as sanctioning bribery by another name — see here or here — and called for its repeal.  

Post-Wal-Mart, one can imagine two scenarios playing out, either of which would basically sweep the statutory exception into the dustbin of history. First, the DOJ could use this case to set a powerful and high-profile precedent that the systematic bribery of government officials to obtain permits will be punished regardless of whether the favor sought was routine. With a precedent of this magnitude, businesses, lawyers, and enforcement officials may generally conclude that the exception is effectively dead.  

Should that not happen, and the agencies ultimately determine that many of the reported payments are in fact legal under U.S. law, the public outrage would be deafening. The movement to amend the FCPA could take an entirely new turn. We could see a bill to repeal the exception — call it the Cummings-Waxman bill.  And who could oppose it? Either by amendment or by enforcement, I wonder if this exception is doomed.

Ask not for whom the bell tolls, Facilitating Payments; it tolls for thee. 

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Andy Spalding is a contributing editor of the FCPA Blog. He teaches international business law at the Chicago-Kent College of Law. Effective June 1, he’ll be an Assistant Professor at the University of Richmond School of Law.