The ‘Star Chamber’, a somewhat sinister-sounding governmental group tasked with reducing bureaucracy, is to carry out a review of the Bribery Act 2010 with a view to examining facilitation payments. At present, the act draws no distinction between facilitation payments or other payments, such that any payment (facilitating or otherwise) is capable of being caught as a bribe.
News of this review appears to have polarised opinion. The prospect of a review was lauded by British business, represented by organisations such as the CBI (pictured) and the British Chamber of Commerce, which called for greater clarity and a level playing field. Transparency International, by contrast, feared it would lead to a watering down of anti-corruption legislation.
Both arguments carry some weight. Small and medium-sized businesses in particular perceive a disadvantage in exporting to markets where facilitation or ‘grease’ payments are the norm, and there is insufficient guidance as to whether they risk prosecution. In certain emerging markets and the BRIC countries (Brazil, Russia, India and China), the risk can prevent UK businesses exporting.
Add to this the fact that competitors are not similarly restricted and one can understand the call that British commerce is being held back; as the act seeks to impose business values that are not recognised or applied worldwide. The counterargument also sounds convincing though – that we would be bucking the trend toward tighter anti-corruption legislation and doing so before there has been any proper testing of the act. All the more so, indeed, when bolstered by the claim that any dilution of the act would foster and encourage bribery at the very time when anti-corruption is firmly on the agenda for the current G8 Summit.
In truth, these contrasting positions ignore the middle ground and are an unsophisticated approach to a more complex global problem. Bribery legislation lacks global harmonisation, just as cultural attitudes differ as to how business should be done. There are differences not only between the UK and the US, which recognises facilitation payments, but also between EU member states. Given the extra-territorial effect of the anti-bribery laws of key European jurisdictions (France, Germany, Spain, Italy, Netherlands and the UK) any business needs to ensure it complies with the highest common regulation if it is to avoid risk of prosecution.
Germany and Spain do not draw a distinction between facilitation payments and other payments, but both appear to allow customary overseas payments or gifts that are small, appropriate and disconnected from securing business. The Netherlands goes further and has issued guidance stating that it will not prosecute facilitation payments to foreign officials. The UK may be an important player on the world stage – but it is only one player.
There is also the rather important question of defining facilitation payments, before we determine if allowing them is a retrograde step. The US Foreign Corrupt Practices Act exempts a facilitating or expediting payment to a foreign official, political party or party official where its purpose is to expedite or secure the performance of a routine governmental action. Such routine actions should not include those in which the foreign official exercises official discretion and does not include a decision to award new business or continue business with a particular party.
Moreover, the exemption is not widely relied upon, given the fear of sanctions should the payment be held to be outside the exemption. Here then, the difficulty of interpretation and guidance looms into view, even where there is recognition that a facilitation payment may not constitute a criminal bribe. Any review ought to recognise the practical need to conduct business with a degree of certainty of outcome. In addition, however altruistic the intent, one should recognise that there may be situations and jurisdictions where some form of routine payments are an essential ingredient of doing business. If those properly recorded payments permit that business without influencing the exercise of discretion or warping the fairness of completion, then there is arguably no bribe or ‘ill’ involved.
The difficulty will, of course, lie in the level of any payment and its proportionality. The key is in pitching at the right level and ensuring, with or without any facilitation payment exemption, that there is clear, straightforward guidance so that businesses are able to appreciate when the line might be crossed.
In the absence of global harmonisation of anti-bribery and corruption law and its enforcement, the landscape will remain confused and uneven. One man’s bribe is another man’s gift. The best we can presently hope for is a clear and decisive approach that all manner and size of UK-connected business can make sense of.
Dan Hyde is a partner at HowardKennedyFsi