“A facilitation payment is a type of bribe and should be seen as such,” it reads. They “were illegal before the Bribery Act came into force and they are illegal under the Bribery Act, regardless of their size or frequency.”
That position may yet be made more hazy by the revelation that the government will shortly review guidance over the payments following concerns over the cost of compliance for small and medium-sized companies, reports The FT.
The review – prompted by a government effort to cut red tape – was welcomed by business and met with hostility by opposition politicians.
“That the government regards the fight against bribery as mere red tape is immoral and shows a staggering disregard for the public clamour for responsible capitalism,” said Emily Thornberry, Labour’s shadow attorney-general.
A review of facilitation payments would follow in the path of the US, which exempted them from its Foreign Corrupt Practices Act after 11 years, according to Mike Koehler, an FCPA expert.
“It’s an important law and it will take time to figure out how to strike the right balance,” he said of the Bribery Act. “This whole notion that just because you have a law that focuses on bribery that somehow it’s untouchable [ . . .] is just not a good response.”
Individuals face as much as 10 years in prison and companies risk unlimited fines if they breach the act. It came into effect less than two years ago amid much fanfare from government that, in the words of Ken Clarke, the justice secretary at the time and still the government’s anti-corruption champion, the UK had “clarity and a level playing field”.
As a result of the act’s sweeping nature – which allows the SFO to prosecute bribery globally as long as it is linked to the UK – and a defence for companies being that they have “adequate procedures” to guard against bribery, a cottage industry of lawyers and others sprung up to put in place sometimes questionable compliance programmes. Their services come at no small cost.
“Sadly some advisers have engaged in scaremongering to generate work,” said Barry Vitou, a Bribery Act expert at Pinsent Masons. “The truth is compliance should be proportionate. For SME’s, broadly speaking, compliance should not be onerous or costly.”
The act was developed under the previous Labour government but pushed through parliament by the coalition. It was designed partly to counter concerns by the OECD that the UK was weak on tackling corruption. This concern grew particularly in the wake of the BAE Systems case, when Downing Street intervened on national security grounds to quash the SFO’s probe into the company’s arms deal with Saudi Arabia in 2006.
The OECD’s Nicola Bonucci said in an interview: “Facilitation payments are not outlawed [under the OECD convention], but in 2009, from a policy point of view, we sent a strong message that parties to the convention should discourage and combat this phenomenon.”