In search of clarity on the OECD and facilitation payments
Friday, May 16, 2014 at 7:18AM
Andy Spalding in Facilitating Payments, OECD Convention on Combating Bribery of Foreign Public Officials

Nicola Bonucci and Patrick Moulette recently posted a discussion of the OECD's position on facilitation payments. I admire the work of the OECD greatly, and I personally support its position on these payments.  I'm no critic of either.  But in seeking to garner further support for the OECD's position, their post employs a couple rhetorical devices that might be just a little confusing. In the spirit of seeking clarity and understanding, I write now as one who supports the OECD position but, unlike Bonucci and Moulette, am not charged with defending it.

It's the two rhetorical questions that can trip us up if we're not careful. Let's look at each of them.

1. "Where then is room for the continued debate?" The debate they're referencing, as far as I can tell, is whether the Convention should take a stronger position on facilitation payments than it now takes. Their post is absolutely clear and candid in explaining the Convention's current position: that Member countries should "encourage" companies to address these payments through "internal company controls, codes of ethics, and compliance programs." They admit, in other words, that the Convention does not require Member states to prohibit facilitation payments. I wish to make only two points: 1) many if not most readers of the FCPA Blog (unless they have specifically studied this issue) probably assume that the Convention DOES take a stronger position; and 2) many (but not necessarily most) readers believe that the Convention SHOULD take a stronger position.  

Bonucci and Moulette are right: there's no room for debate on the first question (although I, and other editors of the FCPA Blog, were surprised to discover the answer, and much room remains for continued education of the public). But is there room on the second? That is, is there room to debate whether the Convention should prohibit facilitation payments? Readers, make no mistake:  the room is huge, and exists all over the world.  Perfectly reasonable people debate that all the time. And I point this out not as someone who thinks the OECD position should change (at least, I don't think it should change given our current state of global legal and economic development, but hope and trust that the time will come soon for it to change). Rather, I point it out as one who thinks that continued debate on the question is vitally important, and eminently reasonable.  

2. "Does the Convention rely on homogeneity?" A slightly misleading question, because the fair answer would be, "sometimes no, but sometimes yes." It requires homogeneity, for example, in prohibiting bribes.  Plainly.  That's the purpose of this, and all such conventions: to establish a measure of homogeneity among members.  But such conventions must also be flexible. Accordingly, the OECD Convention does not require homogeneity, for example, on the issue of corporate liability; rather, it allows  member states to establish the "liability" of legal persons "in accordance with [their] legal principles," and leaves it to the Member states to decide whether corporate liability should be criminal, civil, or administrative (some jurisdictions recognize corporate criminal liability, and some do not).  

So the question any discerning reader must ask is, when does the Convention require homogeneity, and when does it permit heterogeneity? On facilitation payments, the Convention allows heterogeneity. Interesting. But a great many people think the Convention should slide the facilitation payments section on over to the other side of the spectrum, the homogeneity side.

Ultimately, the Convention takes a kind of corporate social responsibility approach to facilitation payments: we recognize they're bad, but we're not going to prohibit them, and will encourage companies to do the right thing. To some, that's surprising; and to some, it's objectionable. I'd suggest that continued debate on whether this is the right position, now or at any point in the future, is absolutely essential, and inevitable. But I probably don't have to say that, other than in this post.

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Andy Spalding is a senior editor of the FCPA Blog. He is an Assistant Professor at the University of Richmond School of Law.

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