When we think of Foreign Corrupt Practice Act (FCPA) enforcement, what comes to mind are the nearly monthly headlines about multi-million dollar criminal settlements resulting from hundreds of thousands or millions of dollars in bribes to foreign officials. But in-house counsel know that the devil is in the details. It’s the less-publicized, less-spectacular questions relating to facilitation payments and expenses for gifts and hospitality that keep in-house counsel at even the most anti-bribery compliant companies scrutinizing their expenditures.
Recognizing the increasing globalization of industry and the breadth of extraterritorial application of the FCPA and the UK Bribery Act, this article examines the treatment of facilitation payments and gift and hospitality expenses under both anti-bribery schemes.
Contrary treatment under the Bribery Act
In sharp contrast to the FCPA, the UK Bribery Act does not exempt facilitating payments from its prohibitions. Instead, any payments offered, promised or given to a foreign official for the purpose of influencing the foreign official in the performance of his functions as a public official, and with the intent to obtain or retain business or a business advantage, are considered illegal bribery under the Act.
However, that defense, which is essentially a rogue employee defense, likely would not be available to the company in the hypothetical because of the pervasive nature of the payments and evidence that the company has condoned the practice.
FCPA treatment of gifts and hospitality
Bribery Act treatment of gifts and hospitality
In order to determine whether expenditures are reasonable and proportionate hospitality, which is normal business and is to be encouraged, at least in the eyes of former Director Alderman,  or disguised illegal bribe payments, prosecutors assess whether the payment is “lavish or extravagant,” and whether there is evidence that the payment is to induce someone to improperly perform their duties with a view to obtaining a business advantage. A payment may be looked at as a bribe if it is related in time to some actual or anticipated business with the recipient, particularly where some form of competitive process is involved. This has been coined the “improper performance test.”