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Facilitating Payments (De)mystified (Part II)

We noted in the prior post that the OECD Convention is just a bit bashful on the question of facilitation payments. The text makes no mention of them, but the “Commentaries” provide that while some countries will prohibit them, in other countries criminalization “does not seem [] practical or effective.”  We asked, of the 39 signatory nations to the OECD Convention, how many have adopted the exception?

I set my outstanding research assistant at the University of Richmond School of Law, Tim Archer, on the trail. He did the hard work, and here’s what he found: approximately 30% of the signatories, or 11 of 39, have adopted the exception; the remaining 28, or roughly 70%, have not. And the breakdown is quite interesting:

Countries that have adopted the facilitating payment exception: 

Australia, Austria, Canada, Greece, South Korea, New Zealand, Slovak Republic, South Africa, Spain, Switzerland, and the U.S.

Countries that have rejected the exception:

Argentina, Belgium, Brazil, Bulgaria, Chile, Czech Republic, Denmark, Estonia, Finland, France, Germany, Hungary, Iceland, Ireland, Israel, Italy, Japan, Luxembourg, Mexico, Netherlands, Norway, Poland, Portugal, Russia, Slovenia, Sweden, Turkey, and the U.K.

One might have expected the former category to be occupied mainly by countries that rank poorly on the Corruption Perceptions Index and/or are doing next to nothing in enforcement, and the latter category to be the least corrupt and the most aggressive enforcers. But it doesn’t quite fall out that way; you see countries on both ends of the anti-bribery spectrum in both categories.  

What, then, explains the breakdown? We don’t know, but we’re thinking about it. As always, observations from readers are most welcome.


Andy Spalding is the senior editor of the FCPA Blog. A former Fulbright Senior Research Scholar in Asia, he’s Assistant Professor at the University of Richmond School of Law.

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1 Comment

  1. Andy:

    I have a few observations about this post on facilitating payments (FPs) that I thought may be helpful for your readers. While acknowledging that the gist of the post (and the prior post from Monday June 11) is accurate (e.g., the actual Convention Articles do not acknowledge FPs and the OECD does not recognize the provision of FPs as a bribery "offense"), it may provide a bit more balance to the greater discussion on the OECD's position on FPs to highlight additional coverage in the related Convention documents wherein the Organization makes it abundantly clear that it frowns heavily on the practice.

    For example, in the paragraph you cite today from the Commentaries to the Convention (and as quoted in Monday's post), the OECD labels FPs a "corrosive phenomenon." (Commentaries at p.15.) Further, in the Recommendation section of the Convention document, the OECD advises member countries to "combat the phenomenon" and "encourage companies to prohibit or discourage the[ir] use . . . recognising that such payments are generally illegal in the countries where they are made." (Recommendation at p.22.) One line later, the document "urges all countries to raise awareness of their public officials on . . . domestic bribery . . . laws with a view to stopping the solicitation and acceptance of small [FPs]." (Recommendation at p.22.) Finally, in the Guidelines for Multinational Enterprises, the Convention document counsels multinational entities to prohibit or discourage "the use of small facilitation payments." (Guidelines at p. 39.)

    So while the actual Articles to the Convention are ambiguously silent on FPs — creating the misperception among many, as you noted on June 11, that the OECD, by omission, effectively outlaws FPs — the greater Convention document itself, viewed in its totality, paints a more fulsome picture of the OECD's position (and accompanying recommendations) with respect to a practice that it clearly believes to be "corrosive" in nature.

    Perhaps the organization should have done a better job spotlighting its position instead of "burying" it in the Commentaries, Recommendations, and Guidelines. But I believe we as practitioners and commentators do more justice to the OECD's perspective by pointing out its less conspicuous (but not necessarily less meaningful) references to FPs in the accompanying documents "related to" the Convention.

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