OECD Seeks to Ice Grease Payments

December 11, 2009

In an announcement this week, the Organization for Economic Cooperation and Development (OECD) took a strong stance against so-called “facilitation” or “grease” payments allowed under anticorruption laws such as the U.S. Foreign Corrupt Practices Act (FCPA), but outlawed in most countries. The OECD is a group representing the world’s 30 largest economies. It is an active and well-respected player in helping develop and encourage the adoption of anticorruption laws around the world.

In an interview this week, the OECD Secretary-General described these low-level payments, designed to expedite performance of a “routine government action” such as obtaining mail delivery, or phone or power service, as “corrosive . . . particularly on sustainable economic development and the rule of law.”

These comments came as the OECD marked the 10th anniversary of its Anti-Bribery Convention entering into force, with its member countries and eight other signatory countries agreeing to “reinforce their efforts to prevent, detect and investigate foreign bribery,” including a commitment to periodically review policies and approaches to small facilitation payments.

As part of this week’s events, U.S. Secretary of State Hillary Rodham Clinton stated that the “United States fully supports the OECD’s anticorruption agenda,” and continues working to bring more countries under the OECD Anti-Bribery Convention.

Very few countries other than the United States allow facilitation payments. They have come under increasing fire as inconsistent with the totality of U.S. policy on anticorruption, particularly in light of the current aggressive FCPA enforcement environment.

Facilitation payments have long proved a difficult issue for U.S. companies operating overseas, particularly in regions where everyday, low-level corruption can impact business operations significantly. Although allowed under the FCPA, corporations have increasingly restricted or banned their use by company personnel. One of the primary reasons for this is a concern that even valid facilitation payments could invite scrutiny from U.S. or foreign law enforcement, or could result in books-and-records violations if not properly recorded.

McGuireWoods has attorneys with extensive experience dealing with FCPA and other anticorruption issues, including defending investigations, conducting risk assessments, audits and internal investigations, and designing and helping implement overall and anticorruption-specific corporate compliance policies, programs and training.