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Corruption Grey Areas

Corruption Grey Areas: grease payments and gifts and hospitality Facilitation Payments

Facilitation payments are consideration, often of small value, given to expedite a legal entitlement. The distinction between a facilitation payment and bribery payment turns on a payment's intent rather than its value. Facilitation payments are given with the intent to gain a legal entitlement, while bribery payments are given to gain an undue benefit. However, large-value consideration increases the likelihood that authorities will view the consideration as a bribery payment. Common forms of facilitation payments include small cash payments, cigarettes, soft drinks and alcohol.

US bribery law provides a narrow exception in the FCPA for ‘facilitating or expediting payments’ made in furtherance of routine governmental action that involves non-discretionary acts. Examples of ‘routine governmental action’ include the processing of visas, proving police protection or mail service, and supplying utilities.

Not all counties provide an exception for facilitation payments. However, the distinction between facilitation payments and bribery payments can be an important public policy consideration by authorities determining whether and what type of enforcement action is appropriate.

Gifts, Hospitality and Travel Expenses

Genuine gifts, hospitality, entertainment and travel are generally permissible where they are proportionate, reasonable and given for the right purpose. The distinction between permissible gifts and illicit bribery does not exclusively turn on value. Like facilitation payments, the more extravagant the gift, the more likely it was given with an improper purpose. Gifts given to third parties, like an official’s family, as an indirect means of influence, can also create a bribery offence. Gifts of nominal value are unlikely to improperly influence government officials. The US has published a number of gifts, hospitality and travel cases brought in violation of the FCPA, including the following:

  • A government official received $250,000, a country club membership fee, a generator, household maintenance expenses, payment of phone bills and an automobile worth $20,000.
  • A trip to Paris for a government official and his wife that consisted primarily of touring activities via a chauffeur-driven vehicle.
  • A cousin and close friend of a foreign official, whose influence was sought in the awarding of contracts, were provided airline tickets and payment of personal bills.

Charitable Contributions

Charitable contributions are generally permissible where given as part of a legitimate outreach. However, these contributions cannot be used as an indirect way of influencing foreign public officials. The US provides five questions to ask when making charitable payments in a foreign country:

  1. What is the purpose of the payment?
  2. Is the payment consistent with the company’s internal guidelines on charitable giving?
  3. Is the payment at the request of a foreign official?
  4. Is a foreign official associated with the charity and, if so, can the foreign official make decisions regarding your business in that country?
  5. Is the payment conditioned upon receiving business or other benefits?

Model Code of Conduct