Dilemma 12:  Facilitation payments - Answer

In most countries, it is illegal to make an unauthorised payment to an 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 your company is based in an OECD country, you and/or your company 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: 

• If you think that it may be a legitimate expediting fee, ask him for an official receipt for the fee.

• If you think that it is not legitimate, politely refuse to pay, and request that the permit is issued immediately without needing an additional payment.

• If the demander persists with the request for payment, inform him that your employer prohibits this type of payment, and that, if you pay, you will have to report it to your employer who will then report it to the demander’s employer and the criminal authorities.

• If the demand is made by a government official, and there are government procedures in place to report the official, then inform the official that these procedures would require you to report.

• 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 your company will make a formal complaint to one or more of the relevant government department, the project owner, the funders, your embassy, and the criminal authorities.

  
  

Some organisations take the 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.