Matthew J. Feeley, a shareholder in Buchanan Ingersoll & Rooney’s Litigation Section, was quoted about facilitation payments in the August 8, 2012 edition of The FCPA Report.
Facilitation payments are made to foreign officials in order to expedite or facilitate tasks and are considered “legal bribes” under the Foreign Corrupt Practices Act (FCPA). However, they can be prohibited under foreign bribery laws and as payments to domestic officials, which makes it difficult for companies to find balance between legal compliance and business flexibility. Prohibiting facilitation payments can cripple a company in competitive markets, while using facilitation payments too often can harm a company’s reputation.
Facilitation payments are sometimes necessary to protect a company’s employees from physical harm or violence. Other times, not paying facilitation payments can bring business to a halt. Therefore, instead of banning facilitation payments completely, many companies are creating policies regarding facilitation payments and trying to include some flexibility in these policies.
When drafting a facilitation payment policy, companies should include an approval process for the payments. Before approving a facilitation payment, Feeley explained how important it is to involve legal and compliance functions.
“If you set up a compliance program where you allow facilitation payments and you don’t include some type of approval process, you’re really leaving the decision up to the boots on the ground, which is putting a lot of discretionary judgment in line-level employees. I don’t think any company really wants those employees making decisions that have such serious implications. It’s really a legal matter that should be handled by the in-house legal department or the compliance regime,” Feeley said.
In addition to an approval process, companies must properly record facilitation payments, which may involve the legal department, as well as the accounting or finance department. Providing sufficient detail in the documentation can help prevent violations in the books and records.
However as Feeley explained, “There is some hesitancy by companies to record that they have made facilitation payments given the current global attitude toward allowing them. When you put it on the books as a facilitation payment, you’re essentially creating a record of violating various local laws. That puts companies in a difficult position, which is why most companies prohibit them completely now.”
A company’s policy about facilitation payments and anti-bribery compliance can be more effective if employees receive proper and regular training about the policy. Feeley suggested implementing in person, video or online training. He also suggested setting up a hotline to address employees’ questions or concerns and distributing a handbook.
“Along the lines of addressing questions or concerns, a hotline overseen by the legal or compliance department is imperative for companies to help employees understand various country cultures where you are operating, how it applies to your company’s business, what is expected to be able to operate in that country and what employees can do in any given circumstance,” Feeley explained.
“It is helpful to issue a handbook or guidebook in case employees have questions,” he added.