Keeping Anti-Corruption Compliance Simple
You can always count on Howard Sklar to make things interesting. His latest article, Who is It Okay to Bribe? (Here), is another in the line of provocative posts. Howard always gets people to think. But without taking Howard on too strongly (let’s face it, I am no FCPA Professor, or Tom Fox, who both enjoy taking Howard on), his last column was more of a profound grasp of what is obvious.
FCPA practitioners like to labor over the hair-splitting analysis required to determine who is or is not a “foreign official” under the FCPA . Let’s face it – do you really want to try and explain to company personnel that they have to be careful when dealing with a foreign official or not dealing with a foreign official? Gimme a break – compliance strategy has to be simple and straight-forward. The message should be a consistent one – bribes are prohibited in every context.
The UK Bribery Act was supposed to be the rationale for adopting a clean policy – bribery in every context is prohibited. Unfortunately, as UK Bribery Act enforcement remains dormant, this argument is not very persuasive.
Rather then building a compliance program around a hair-splitting definition of “foreign official,” it is better to take a blanket approach – bribery is prohibited no matter who the recipient.
Conversely, companies should add an anti-kickback policy which prohibits company officers and employees from receiving prohibited benefits from suppliers or customers. Adding this element to an anti-corruption policy promotes ethical conduct and adherence to basic social norms.
All of these ideas are good on paper and in reality. That is not true when it comes to “facilitation payments.” While I would like to join the chorus and ban all facilitation payments, it is simply unrealistic in today’s world to prohibit all facilitation payments. Any company that has such a ban has violated the ban – I would bet anything on that.
Global companies have to pay facilitation payments or else suffer significant competitive harms. I understand all the arguments in favor of adopting a total ban but compliance will never happen. Small, routine payments are a fact of life.
I am not saying to give up on compliance – only that facilitation payments should be controlled and reviewed. Otherwise, facilitation payments are a high risk area for abuse which can be used as a cover for more sophisticated bribery schemes by lower level employees. The key is to ensure that facilitation payments are reviewed by compliance and legal.
The risk of prosecution over a facilitation payment where the company approves it in “good faith” is non-existent. Facilitation payments should be reviewed under a standard protocol and approved under a prospective standard. While it is easy for everyone to take the high road and say that facilitation payments should be banned, it is completely unrealistic to think that such a ban will always be followed.
An excellent post, and fine points (you take me on just as good as Tom or Mike ever did).
We’ll have to agree to disagree about facilitation payments. I think it’s possible to do without them. I think the “you’ll kill the business” reaction is hyperbole from the people most invested (no pun intended) in being able to make the payments.
I also haven’t seen any data comparing results of companies that make the payments with those who don’t.
Finally, a willingness to bribe is a willingness to bribe, and one bribe leads to a more permissive culture towards bribery.
Just my thoughts.