Stopping the ‘malady of facilitation payments’
Tuesday, May 13, 2014 at 6:28AM
Nicola Bonucci and Patrick Moulette in FFacilitiating Payments, OECD, OECD Anti-Bribery Convention, OECD Working Group

Small facilitation payments is a not so-small subject that has sparked much recent controversy. Commentators have asked why the OECD Anti-Bribery Convention doesn’t jump in and take a position on this issue. Well, as a matter of fact, it does.

The 2009 Recommendation for Further Combating Bribery of Foreign Public Officials in International Business Transactions (in pdf here) recommends “in view of the corrosive effect of small facilitation payments” that Member countries should review their policies and approaches on combatting this phenomenon and encourage their companies to prohibit or discourage the use of such payments through internal company controls, codes of ethics and compliance programs. Further, the Recommendation "urges all countries to raise awareness of their public officials […] with a view to stopping the solicitation and acceptance of small facilitation payments.”

Where then is room for the continued debate? The language of the 2009 Recommendation -- muses an earlier post in the FCPA Blog by Andy Spalding -- is only slightly stronger than that of the 1997 Commentary to the Convention and stops short of criminalizing such payments, resulting in what commentators have described as motley treatment among Member countries. Some countries apply this “exception” (as it is treated in the FCPA) while others prohibit such payment in their legislative schemes. Is this a shortcoming? Does the Convention rely on homogeneity?

Perhaps we must be reminded that the inspiration for the Convention was to employ functional equivalence, an idea that means in practice each country can choose to implement the objectives of the Convention within the construct of its own particular legislative and institutional framework.

Taking another look at small facilitation payments against this backdrop leads us to the question of whether a demand for harmonization of standards really means harmonization of legislation. The standard, we would argue, is pretty clear: small facilitation payments are harmful and cannot simply be ignored. The approach, however, is not uniform. As a weed can be treated topically by pesticide or pulled up at the root, some countries may wish to address the malady through criminalization, others through awareness-raising in private sector.

But the final chapter on the matter has not yet been written. As our understanding of this malady evolves so then does our methodology to combat it. In the latest phase of evaluations, each country is called to account for its treatment of this issue and the Working Group on Bribery continues to keep its finger on the pulse of private sector. For the moment, the Group is scrutinizing this problem, one country at a time.

The opinions expressed in this post are the authors and not intended to represent the views of the OECD

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Nicola Bonucci is the OECD's Director for Legal Affairs and the coordinator for accession. Since 1997 he's been closely involved in the monitoring and follow-up of the OECD Anti-Bribery Convention. He holds a DEA in Public International Law from the University of Paris X Nanterre, a DESS in International Administration from the University of Paris II-Assas, and a Master of International and Comparative Law from the University of Notre Dame.
 
Patrick Moulette is the Head of the Anti-Corruption Division in the Directorate for Financial and Enterprise Affairs of the OECD. His position involves designing and managing the work program of the 41-country Working Group on Bribery in International Business Transactions, as well as leading the process of evaluating the implementation of the OECD Convention and Recommendations. He's a graduate of the Paris Institute of Political Studies and has a Master's degree in Public Law and a Master's degree in Corporate Law.

Article originally appeared on The FCPA Blog (http://www.fcpablog.com/).
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