In an article published in the July issue of the
Compliance Week magazine, entitled "The
UK Bribery Act: How
to Mitigate the Risks or Prosecution for Making Facilitation Payments", authors
Jonathan Feig and Richard Thomas discuss how companies can mitigate their risks
of prosecution for making facilitation payments under the Bribery Act. This is
an area that many US companies may have exposure to as the Foreign Corrupt
Practices Act (FCPA) has an exception for facilitation payments but there is no
corresponding exception or exemption under the Bribery Act.
Richard Alderman, Director of the Serious Fraud Office
(SFO), was recently quoted in thebriberyact.com
regarding facilitation payments as saying:
"...I do not expect facilitation payments to end the moment
the Bribery Act comes into force. What I do expect though is for corporates who
do not yet have a zero tolerance approach to these payments, to commit
themselves to such an approach and to work on how to eliminate these payments
over a period of time. I have also said that these corporates should come and
talk to the SFO about these issues so that we can understand that their
commitment is real. This also gives the corporate the opportunity to talk to us
about the problems that they face in carrying on business in the areas in which
they trade. It is important for us to know this in order to discuss with the
corporate what is a sensible process." [emphasis mine]
As a lawyer, you might well seek from further
clarification on what the "sensible approach" might be and how one could advise
a client on such a term. Fortunately that is exactly what my colleagues who run
the site, thebriberyact.com, did. Richard Kovalevsky Q.C. and Barry
Vitou, sought further guidance from the SFO and reported that the SFO will be
"looking to see" the following:
1. Whether the company has a clear issued policy
regarding such payments;
2. Whether written guidance is available to relevant
employees as to the procedure they should follow when asked to make such
3. Whether such procedures are being followed by
4. If there is evidence that all such payments are being
recorded by the company;
5. If there is evidence that proper action (collective or
otherwise) is being taken to inform the appropriate authorities in the
countries concerned that such payments are being demanded;
6. Whether the company is taking what practical steps it
can to curtail the making of such payments.
If the answers to these questions are satisfactory then
the corporate should be shielded from prosecution. The Feig and Thomas article
would seem to speak to this final Point 6, what practical steps is your company
taking "to curtail the making of such [facilitation] payments"? They lay out a
5 step process to help curtail the making of facilitation payments.
Revisit the Anti-Corruption Policy
Your company should have a plan to phase out facilitation
payments made by both company employees and those working on your behalf such
as agents, resellers, distributor and other foreign business partners.
Understand How Operations Have Changed Since the Ban on Facilitation Payments
Your company should consider key areas where facilitation
payments occur to make certain that they are not being paid in another form.
For instance, do employees wait in line like everyone else to go through
customs or do they now use an agent to shuffle them through in groups. If your
company has engaged in such a customs representative, has this agent been
vetted through your due diligence program and if so has this agent been
Understand How Employees Manage Situations Where They are Pressured to Make
The key here is listening. Your company needs to listen
to key employees who travel overseas to high risk areas about situations that
they face where a bribe is solicited. Your company also needs an understanding
of areas where what employees face is not solicitation of bribes but really
extortion because their life, liberty or health and safety is in immediate
peril. Your company will back them up if they are required to pay monies to
extricate themselves from such a situation.
Update Training and Internal Communications for Facilitation Payments
Your company must update your training to make clear that
facilitation payments will no longer be allowed under your compliance program.
The information that your company obtains from listening to your employee, as
set out above will enable your company to develop information that they will
need for situations where a bribe is demanded. Incorporating the likely
scenarios that employees will face into your training is important so that your
company can present responses which can be used by employees. This way an
employee is not left out in the cold or in the dark about what might happen and
what he or she can do about it.
Update Your Anti-Corruption Monitoring Program
Your company should update its anti-corruption monitoring
program to ensure that it captures the identification of facilitation payments.
If any such payments are identified, they should be elevated to the compliance
department. These controls need to be tested to ascertain their effectiveness.
Lastly such controls need to be extended to your foreign business partners.
As I have previously written, the end of facilitation
payments in coming. The OECD recommends that they be done away with and the
Bribery Act provides no exemption for them. Perhaps a Republican Congress would
feel that by removing the facilitation payment exemption it would somehow hurt
US businesses overseas. But this feeling would not last for long. So if your
company does business in the UK or has a UK subsidiary, you need to start
preparing for the end of facilitation payments. You would do well to regularly
read thebriberyact.com and to follow the steps laid out by Feig and
Thomas in the Compliance Week magazine.
Visit the FCPA Compliance and Ethics Blog,
hosted by Thomas Fox, for more commentary on FCPA compliance, indemnities and
other forms of risk management for a worldwide energy practice, tax issues
faced by multi-national US companies, insurance coverage issues and protection
of trade secrets.
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© Thomas R. Fox, 2011
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