Are Facilitation Payments Legal

The Income Tax Assessment Act, as amended in 1999, allows businesses to claim relief payments as deductions (prior to 1999, bribes were also valid deductions), but its definition does not refer to the amount of the payment. [8] A facilitation payment is a small bribe called a “large payment” or “prompt payment” that is typically requested to facilitate or expedite the execution of a routine transaction or service to which the person or business making the payment is legally entitled. All businesses must immediately stop making facilitation payments. Companies must recognize and prohibit them as bribes. All companies must report on their payment facilitation policy as part of their transparent reporting on their anti-corruption programs. Based on the information provided by the DOJ in opinion releases and enforcement actions, there are several ideas that can be drawn from what should be included in your facilitation payment policy: A facilitation payment is a payment that a company makes to facilitate legal or regulatory proceedings. Here`s the key part. The thing you make possible must already be something you are entitled to. You use the money to show your appreciation to your agency or government entity, which deals with something they would do for you anyway. An example of payment facilitation is shown in the following scenario. Suppose a company needs a specific license or permit to operate. The company is entitled to the licence or approval because it has met all the requirements. The company is also willing to open its doors at the store, but is required by law to wait until the license or permit is officially issued.

When accountants hear the term “relief payment,” they can automatically classify it as corruption. But the truth is that moderation payments are legal in some contexts. They are often used in international and governmental measures. Also keep in mind that defending relief payments is an exception to the FCPA`s ban on corruption. Any accused who wished to avail himself of this exception at trial would have to provide credible evidence to support his position, but in the end, it would be the Trier of facts that would decide. As with any compliance defense, the exception is only available if you use it in court, and it would be hard to imagine a company ever wanting such a case to see the light of a courtroom. In U.S. federal law, a facilitating payment or a significant payment as defined in 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 government actions,” such as document processing, the issuance of permits and other acts of a public servant. accelerate the performance of tasks that are not discretionary in nature, i.e. they are already obliged to perform. The payment is not intended to affect the outcome of the official`s action, but only the schedule.

[4] Relief payments are one of the few exceptions to the legal anti-corruption prohibitions. [Clarification required] It should also be noted that the motion explicitly stated that payment facilitation was not an affirmative defense: “[If] Congress had intended the `facilitation or acceleration of the payment exception` to be an affirmative defense, it would have included it [in the affirmative defense provisions].” The motion further opposed the government`s assertion that recovering the plane would help Duran`s businesses facilitate new business and was therefore banned. Relief payments are like bribes, but with very important differences! Learn all about them in this guide The corruption system reportedly involved payments made to speed up the extremely slow customs clearance process in Russia for the delivery of deliveries to the nearby Ford plant. It was alleged that DB Schenker paid local tax collectors a “service fee” for the speedy eviction. The money was not handed over directly to the customs officers. Instead, Schenker paid a “service fee” to a Russian agency, which then transferred the funds to accounts in Switzerland and Cyprus belonging to a financial holding company registered in the Caribbean and owned by the Russian agency. DB Schenker would have transferred up to 2.25 million euros to the Russian agency over a period of 2.5 years. Transparency International UK uses the term small bribes instead of facilitation payments, as it expresses the true nature of such a transaction, provides a precise definition and provides a basis for combating this form of bribery transaction. Many Australian states are repealing federal legislation and defining payment facilitation as illegal.

[8] In addition to these clear statements on whether the FCPA should continue to authorize bribes; You should also consider the administrative nightmare for any international business. The UK Corruption Act does not provide for such an exception, exemption or defence within the meaning of the FCPA exemption for facilitation payments. This means that even if your company authorises relief payments, it will have to exempt any UK company or subsidiary from the policy. If your company employs UK citizens, they are subject to UK Corruption Act, regardless of who they work and where they may work in the world, so they should also be exempted. If your U.S. company does business with a U.K. company or another company subject to the U.K. Corruption Act, you may be contractually prevented from making facilitation payments while working under that client`s contract. As I said, an administrative nightmare. Small bribes are given different names depending on the context and country; for example, “tea money” in Kenya or “baksheesh” in Egypt. The term facilitation payment originates from the FCPA and generally includes payments made to public servants to use or expedite routine services that public servants are required to provide. Payments made directly to obtain or retain business are not included.

Relief payments are exceptionally allowed in the corruption laws of only four countries: Australia, New Zealand, South Korea and the United States. These laws apply only when they are made abroad and, paradoxically, remain illegal in their own national laws. It should be noted that since relief payments are often hidden in books, they can result in a violation of books and records under the FCPA. The UK Corruption Act is no exception: the FCPA exempts anti-bribery provisions that facilitate payments, small payments to foreign officials made to facilitate or expedite routine government action. A routine act of government is a function or service to which a foreign official is normally bound; A discretionary decision is not permissible. Examples: A facilitating payment[1], or a large payment[2] is an illegal or at least dubious payment to foreign officials that is not considered corruption under the laws of some states as well as in international anti-bribery conventions.