Module 11:  Corruption dilemmas

Dilemma 7:  Facilitation payments - Answer

The first step is to ascertain whether this additional $250 “expediting fee” is an official and legitimate fee.  If it is, then it makes sense to pay it and get the plant cleared immediately.  However, you cannot just take the work of the customs official that this is a legitimate fee.  Therefore:

  • Seek assurance that the fee is legitimate.  For example, if it is legitimate, you would expect that this would be published on a poster in the customs office, or be on the official customs form, or on the Government website.
  • Avoid paying in cash (unless all official customs fees are paid in cash, with no alternative method of payment).  A legitimate fee is most likely to be payable by card.
  • Obtain an official receipt.

If you cannot obtain reasonable assurance that the fee is legitimate, then avoid paying it.  In most countries, it is illegal to make an unauthorised payment to a public official in order to ensure that he performs his function properly.  The payment may be treated as a bribe, or it may be treated as a separate criminal offence.  These types of payment are often called facilitation payments, or may be called “grease”, or “tea money” etc.   Payment can result in prosecution in the country in which you make the payment.  In addition, if you are a national of an OECD country, or if Buildwell is based in an OECD country, you and/or Buildwell may also be committing a crime in your home country.  In general, you should therefore avoid making any such payment. 

The following are some suggested steps to try to resolve a situation where an illegal payment is demanded from you, or where you believe that there will be no outcome unless you pay: 

  • Do not do or say anything which could put you or another person in danger.  If you feel in danger, then pay the amount requested.
  • If there is no suggestion of danger, then, depending on the circumstances, try some or all of the following actions:
    • Politely explain that your organisation’s procedures do not allow you to pay unauthorised fees, and request that the permit is issued immediately without needing an additional payment.
    • If the situation is not resolved, ask to see a more senior official or manager.
    • If this request is refused, or if the senior official or manager is unhelpful, say that Buildwell will make a formal complaint about the situation.
    • If the request is still refused, approach the NRA to see if they can assist.  It will be in the NRA’s interests to get the equipment through customs so as to enable completion of the road on time.

Some organisations take the commercial view that if all the above fails, and the amount in question is very small, and the loss as a result of not paying is very high, then they will pay.  Some countries in practice do not prosecute for payment of these relatively small amounts.  In this situation, advice is to record the circumstances.  If such a payment is made, the company should not claim the payment against tax, and should openly declare the purpose in its accounting records, otherwise the company may, in addition to committing a bribery or facilitation payment offence, be committing accounting and tax offences. 

However, from a legal and ethical perspective, the safe and correct position is not to pay.  If you pay, you may be committing a criminal offence, for which you can be personally prosecuted.

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January 2025
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