Amid reports that the U.K. government is considering allowing facilitation payments in overseas business transactions, let’s all remember that the world has moved on to better norms — like “non-participation” in corruption schemes. And not giving tax deductions for bribery.
So far, global companies are not legally required to take action to uproot or fight corruption, only to refrain from being part of it, since paying bribes further entrenches the network of bribe takers.
A demand for a little “grease” to process a building permit is extortion. The International Chamber of Commerce believes business should not give in to extortion, petty or otherwise. It recommends that companies use its free RESIST training modules to prepare for extortion and to respond with an action plan to defeat it.
For Compliance Officers, facilitation payments are a risky mess to administer. Was that a bribe or just a “facilitation payment”? The Compliance Officer has to check each and every one, and all of them must be recorded accurately in the company’s books, audited, certified by the CFO and subjected to regulatory reviews for improper books and records violations.
Compliance officers should also support ending facilitation payments because they are an excuse for major corruption: evasion of zoning permits, misuse of environmental rules and fast-track real estate permits. In the Wal-Mart scandal, the mantra was “It’s a facilitation payment, not a bribe” as senior officers allegedly paid millions in pay offs, shut down the Compliance Department’s investigation, and covered up for five years.
I don’t think the compliance profession needs another tired, confusing debate about the line between a bribe and a facilitation payment. We are ignoring critical issues of a new FCPA era. According to Professor Andy Spalding, the compliance profession is in a third era (following enactment and then enforcement of the FCPA) focused on this question: What remedies are fair to the victims of corruption, as well as to the companies and American policies?
Currently, millions in FCPA fines go to the U.S. Treasury and nothing to the communities damaged by the bribery. Is that the fair intent of the FCPA? Is that the best American enforcement can do? I hope all compliance professionals will read Professor Spalding’s groundbreaking analysis and debate his suggestions.
Let’s not go backwards by discussing how bribery is OK if it’s just “facilitation payments,” as reportedly happened at Wal-Mart. Let’s move forward by having the essential discussion of FCPA remediation, using the alleged victims of the Wal-Mart scandal as the first big test.
Michael Scher is a Contributing Editor of the FCPA Blog. He has over three decades of experience as a senior compliance officer and attorney. His work for major companies in New York and the Middle East includes military procurements, international trade contracting, supervision of national sales forces and trainings for compliance with related laws, like the FCPA or AML. Miami-based, he assists companies in trainings and work shops and FCPA-related projects or investigations. He can be contacted here.