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« Omnicare whistleblower nabs $17 million | Main | World Bank releases suspension and debarment report »
Thursday
Jun262014

Don't miss it. New guidance on grease payments

A few countries -- including Australia, New Zealand, South Korea and the U.S. -- allow grease payments that happen overseas. But the small bribes are still risky and potentially damaging. 

They're almost always illegal under local law. And there's growing international recognition that facilitation payments aren't easy to distinguish from other bribes.

For those reasons, more and more companies have adopted a no-bribes policy for their global operations, with no exceptions for facilitation payments. That zero-tolerance approach isn't easy.

But there's new guidance about how to reduce or eliminate grease payments. It was published Thursday by Transparency International UK, with support from DLA Piper and FTI Consulting.
 
TI said globally more than 1 in 4 people paid a bribe in a recent 12 month period

"Demands most often occur in overseas markets, where employees may be vulnerable through travelling alone or the company needs to release critical goods from customs," TI said.
 
"When a company pays a bribe of any size, it reinforces a culture of graft which is exceptionally damaging to the economies and societies in which they are paid," according to Robert Barrington, executive director of Transparency International UK.

Barrington said facilitating payments are one of the most difficult corruption problems for companies to eliminate in their operations.
 
Simon Airey, head of investigations at DLA Piper, said: "There are very few multinational companies that aren't at risk of extortion or aren't affected by small bribes and facilitation payments to some extent. Often those payments are concealed from the company by its employees or they are paid covertly by agents and intermediaries."

"This guidance will help companies to reduce their exposure significantly," Airey said.
 
Julian Glass, a managing director at FTI Consulting, said the "widespread demand for these types of payments, combined with the difficulty in detection makes their eradication a real problem. We hope this guidance will help companies to understand good practice in dealing with this difficult issue.”

The new guidance can be downloaded here.

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Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

Reader Comments (2)

What is an exporter supposed to do if a customs agent at the destination port demands a facilitation payment and refuses to process the shipment without such a payment? If the shipment isn't processed, and the customer does not receive the goods, does the exporter have a valid defense in a suit for breach of contract of refusal to pay a facilitation payment? I wish you would think through your comments and provide more balanced coverage of the topic.
June 26, 2014 | Unregistered CommenterTom Petruska
The TI guidance acknowledges the problem with resisting bribes at customs. "Resisting small bribes can have substantial costs for the business: The consequences of refusing to pay bribes may be significant. For example, there can be costs associated with delays in moving goods through customs or hold ups at ports and canals. If goods or shipments are time-sensitive, entire shipments might be put at risk. Companies may lose out to competitors who use small bribes to gain advantage in speeding up their own operations. Employees can be delayed in their travels and work." The guidance suggests collective action, along the lines of what's being talked about at the Basel Institute.
June 26, 2014 | Registered CommenterRichard L. Cassin
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