In June 2014, Transparency International published new guidance on countering small bribes, including “facilitation payments”. Countering small bribes can be exceptionally challenging to companies, according to TI, because payments of these bribes are often entrenched and pervasive, and may be hard for management to detect. Although a number of countries, most notably the US, allow facilitation payments abroad, in most countries these payments and other small bribes are illegal. As such, these bribes must be addressed as a company faces legal risk, reputational damage and operational impact. To avoid or decrease exposure, companies should commit to a culture of integrity and prohibition of small bribes, and should implement programmes to counter small bribes
In its newly published guidance on countering small bribes, Transparency InternationaI UK (TI) provides ten principles on which companies may base their effective countering of small bribes. These principles include having a “supporting culture of integrity” at the company and committing to a policy that prohibits small bribes. Other principles cover the need for the implementation of a programme that counters small bribes, which includes effective risk assessment, training employees, addressing third party risks and monitoring the effectiveness of the programme. TI’s final principle covers the company’s responsibility to act strategically to influence the corrupt environment in which it operates.
Although the illegality of small bribes is nothing new, the impact of small bribes and the corresponding climate of corruption generally receive less attention than incidents which may involve large, one-off payments. But small bribery is generally just as unlawful and may equally put a company and its employees at risk.
Although some countries, including the US, allow facilitation payments (sometimes described as “grease payments”) abroad, in most countries these payments, as well as small bribes in general, are illegal. TI argues in favour of an essentially “zero-tolerance” policy when it comes to small bribes.
Actively countering small bribes is necessary for a company because if it does not it may get exposed to several legal risks (which may include criminal prosecution, and settlement or investigation costs). It may also risk reputational damage (which may lead to financing issues, loss of confidence and trust from business partners or shareholders), and face operational impact (the costs of systematically paying bribes, market distortion, entrenching a corrupt bureaucracy). In a broader sense, small bribery “feeds a climate of corruption”, which creates unstable operating environments for companies, erodes trust in government and public administration and undermines the rule of law.
Given the changing landscape of regulation, where anti-bribery and corruption rules are increasingly aggressively enforced, companies would do well to follow TI’s advice with regard to countering small bribes. Companies should implement programmes to counter them or strengthen existing compliance programmes that focus on the issue of small bribes.