Facilitation Payments are often small amounts with substantial complications
Asian business leaders will gather to get guidance on
Fraud, anti-Corruption & Investigations at the at the corruption summit
in Hong Kong on the 2-4 November 2015. Attend the 3rd annual Fraud, Corruption
& Investigations Asia Summit and get ultimate guidance to end facilitation
payments and achieve zero tolerance on Bribery, Fraud and Corruption http://apac.misti.com/event-details?EVENTID=5195&ORGCODE=20
Sir, you have to pay this small additional
amount to get the installation completed or get the final goods delivered.
Many companies are prompted to provide a small amount, token or gift,
even if all corporate rules do not permit it.
The payments are often described as grease or facilitation money and are
widespread in many countries. The custom may frustrate European or other
Western companies when the African visa-processing or Chinese customs
officer asking for "a little extra sum" when the enterprise is engaged
in a trade transaction. The amount is meant for low-ranking government
officials to obtain real estate licences or push goods through customs.
Corrupt companies get bad reputation
Until 1990, facilitation payments were deductible under most EU GAAP rules.
The universal corruption watchdog still allows facilitation payments to
foreign authorities. The problem, however, is that with large corporations
like Walmart, who is under US probe for paying millions of USD in bribes
in India, speed money payments that are as low as $5 to less than $200,
together add up to a few million dollars. Therefore, Walmart is now likely
to face US foreign-bribery charges under the FCPA over the payments.
Adequate procedures and efforts
Such payments are never huge economic problem, as only tiny amounts are
tolerated, however once you start giving facilitation money, there is
a precedence, and it becomes a habit. Later when the amounts get large,
the total adds up to the fact that companies are alleged to be corrupt
and get a bad reputation for not having adequate compliance procedures
and efforts to avoid corruption.
Facilitation money is not limited to visa expeditions or at border crossings.
It can be a major problem when personal security is involved. Depending
on the company's maturity state and the employee experiences it is advisable
to have an open discussion within the business to ensure uniformity and
efforts to achieve Zero Tolerance to avoid damage to the corporate reputation
Therefore, it is desirable to be transparent and accountable and avoid
discussion behind closed doors.
Take an active stand against bribery
Discuss the differences in direct corruption, where bribes can secure
competitive advantages and facilitation money provided for a service that
the company has already paid for and is entitled to.
After the internal debate on the difference between facilitation and bribery,
companies must realise that the problem cannot be solved by the individual
company on a global basis. However, they can play a significant role by
being firm and strict taking an active stand against bribery.
When facilitation payments are the only option left, the advice often
given is to document the payment and record as much evidence that is possible
for the transaction. Later the incidents is recorded and reported to the
local trade authorities, embassy and with the Foreign Ministry.
Even tough Denmark is on top of the transparency list, according to a
recent survey by the Confederation of Danish Industries 27 percent of
companies paid amounts classified as corruption and bribery for exports
to Africa. The same percentage is 19 for European countries outside the
EU and 18 percent respectively for the Middle East and South and Central
America.
At the 9th annual Governance, Risk
Management and Compliance Summit in Stockholm a separate Bribery and
corruption workshop will be held to discuss the above topic by Claus Andersen
of Royds, London.
