Facilitating payment

Facilitating payment

A facilitating payment is a certain type of payment to foreign officials which is not considered to be bribery according to legislations of some states as well as in the international anti-bribery conventions, e.g., coming from the OECD.


For legal purposes, it is distinguished from bribery, however the distinction is often blurred. [ [http://www.busrep.co.za/index.php?fArticleId=2216247 "Is 'facilitating payment' a bribe or not?"] , "Business Report", September 8, 2004] Determining whether a payment is a facilitating one may be difficult and depend on the circumstances. The value of the payment is not immediately relevant, however the greater the value, the higher are chances that it will be a red flag for law enforcement. Small unofficial payments are customary and even legal in some countries, nevertheless they may present a risk of liability according to the laws of the host country. There also exists a slippery slope danger of evolving into dubious payments.

Business ethics

While being legal, facilitating payments are still considered to be questionable from the point of view of business ethics.Argandoña, Antonio (2005). "Corruption and Companies: The Use of Facilitating Payments", "Journal of Business Ethics", vol. 60, 251-264.] [Bailes, Robert (2006). Facilitation Payments: Culturally Acceptable or Unacceptable Corrupt? "Business Ethics: A European Review", 15(3), 293-298.] The following arguments have been made:
*Unfair competition: smaller business have fewer opportunities and less financial possibilities to "grease" foreign officials.
*sustaining questionable business practices.
*dependence on irregular payments creates additional risk and hence discourages investment

Many companies therefore restrict or severely limit making facilitating payments in their policies, however this practice is not yet widespread. For example, as of 2006, in Australia, among the S&P ASX 100 only 24 companies control facilitating payments and only 15 are reported to prohibit them. [http://www.allbusiness.com/management-companies-enterprises/1188858-1.html "Just how is business done? A review of Australian business's approach to bribery and corruption"] , by Julie Walters, "Keeping Good Companies", July 1, 2006]

Organisation for Economic Co-operation and Development

OECD defines a payment to be a facilitating one if it is paid to government employees to speed up an administrative process where the outcome is already pre-determined.

By country


As of 2006, the Australian law has discrepancies as to the definition of the facilitating payment.

The Criminal Code defines a facilitating payment to be a payment which is
* of a nominal value (the term is not defined in the Code)
* paid to a foreign official for the sole or predominant purpose of expediting a minor routine action, and
* documented as soon as possible.

The Income Tax Assessment Act as amended in 1999 permit companies claim facilitation payments as deductions (before 1999 bribes were also valid deductions), but its definition does not refer to the size of the payment.

Many Australian states override the federal legislation and define facilitating payments as illegal.

United Kingdom

As of 2006, the United Kingdom does not recognize the legality of facilitating payments and does not draw any distinction from bribes. However the OECD notes that the UK is unlikely to prosecute for minor facilitating payments in the areas where it is a common practice.

United States

Within the United States federal legislation, a facilitating payment or "grease payment", as defined by the Foreign Corrupt Practices Act (FCPA) of 1977 and clarified in its 1988 amendments, is a payment to a foreign official, political party or party official for "routine governmental action," such as processing papers, issuing permits, and other actions of an official, in order to expedite performance of duties of non-discretionary nature, i.e., which they are already bound to perform. The payment is not intended to influence the outcome of the official's action, only its timing. Stuart H. Deming (2005) The Foreign Corrupt Practices Act And the New International Norms", American Bar Association, ISBN 1590313267 [http://books.google.com/books?id=ITG208fCRvcC&pg=PA15&lpg=PA15&dq=%22facilitating+payment%22&source=web&ots=aAgWUfUiD4&sig=2zCEc0NNJwgL-GSgPosF0xCxJTU p.15] ] Facilitation payments are one of the few exceptions from anti-bribery prohibitions of the law.

Evolution of the notion

Prior to the 1988 amendments, the exclusion of "grease payments" was via the definition of the "foreign official", which did not include persons without discretionary (decision-making) duties, e.g., ones with clerical functions. The major drawback of this approach is that often it is difficult to properly identify the scope of duties of a foreign official. The 1988 amendment eliminated this drawback by placing the emphasis on the purpose of the payment rather than on the duties of the recipient. At the same time the scope of the "routine governmental actions" in question was made sufficiently narrow and supplied with detailed examples. [ Don Zarin (1995) "Doing Business Under The Foreign Corrupt Practices Act", Practising Law Institute ISBN 0872240878, [http://books.google.com/books?id=bv8jACUiP74C&pg=PT4&vq=facilitating&dq=%22facilitating+payment%22&sig=WLtZd_725SOmPExCTH8MP-fRvMs#PPT114,M1 $5.1] ]


Wikimedia Foundation. 2010.

Игры ⚽ Нужна курсовая?

Look at other dictionaries:

  • facilitating payment — A minor payment made to an individual or organization in order to encourage the correct and timely performance of duties. The term facilitating payment (or expediting payment) is associated with the *Foreign Corrupt Practices Act, which… …   Auditor's dictionary

  • questionable payment — A potentially illegal or improper payment. Examples of improper payments include *bribes and other cash *disbursements made for *corrupt purposes. See also *facilitating payment and the *Foreign Corrupt Practices Act …   Auditor's dictionary

  • expediting payment — An alternative term for *facilitating payment …   Auditor's dictionary

  • facilitation payment — /fəsɪləˈteɪʃən peɪmənt/ (say fuhsiluh tayshuhn paymuhnt) noun an inducement offered to a government official or other powerful official in a foreign country, as by a business which is setting up an operation in that country, to streamline a… …  

  • SADAD Payment System — (SADAD) was established by the Saudi Arabian Monetary Agency (SAMA) to be the national Electronic Bill Presentment and Payment (EBPP) service provider for the Kingdom of Saudi Arabia (KSA). The core mandate for SADAD is to facilitate and… …   Wikipedia

  • Foreign Corrupt Practices Act — FCPA *Anticorruption legislation passed by the U.S. Congress in 1977. The FCPA requires U.S. corporations to maintain adequate *internal control systems throughout their international operations. The FCPA also forbids the payment of *bribes to… …   Auditor's dictionary

  • Foreign Corrupt Practices Act — The Foreign Corrupt Practices Act of 1977 (15 U.S.C. §§ 78dd 1, et seq.) is a United States federal law known primarily for two of its main provisions, one that addresses accounting transparency requirements under the Securities Exchange Act of… …   Wikipedia

  • bribe — An improper or illegal inducement made with the intention of gaining influence over an individual or organization. Bribes can take the form of cash, assets, or services. Most legal and ethical systems forbid bribes, owing to their *corrupting… …   Auditor's dictionary

  • money — moneyless, adj. /mun ee/, n., pl. moneys, monies, adj. n. 1. any circulating medium of exchange, including coins, paper money, and demand deposits. 2. See paper money. 3. gold, silver, or other metal in pieces of convenient form stamped by public …   Universalium

  • china — /chuy neuh/, n. 1. a translucent ceramic material, biscuit fired at a high temperature, its glaze fired at a low temperature. 2. any porcelain ware. 3. plates, cups, saucers, etc., collectively. 4. figurines made of porcelain or ceramic material …   Universalium

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”