F

Summary

Facilitation payments

Small informal payments made to speed up a routine service to which the person or organization making the payment is already entitled.

In many jurisdictions facilitation payments, often paid in the form of cash or a gift, breach anti-bribery laws. Typical examples include paying a utilities representative to jump the queue for a connection, or paying a government official to speed up the processing of a visa. Some commentators note these are more accurately described as small bribes (see bribery).

The United States FCPAhas a prosecution exemption or exception for companies paying “facilitating payments” abroad, although other countries have followed the OECD's 2009 Recommendation to outlaw such practices. Companies frequently experience demands for facilitation payments around shipping and transport, and at the high end such payments amount to thousands of dollars.

There is a debate about the detriment caused by facilitation payments, with a minority of commentators claiming they are acceptable because they are widespread, grease the wheels and do no real harm. A widely-held view is that while facilitation payments may be less directly harmful than other bribes, they are nevertheless damaging because they privilege those who can afford to pay and, in aggregate, they undermine the rule of law.

RB

Fat Leonard: case study

Bribery scandal involving Leonard Glenn Francis (nicknamed “Fat Leonard”) in his role as a contractor to the US Navy.

Leonard Glenn Francis is a Malaysian national who, through his company Glenn Defense Marine (Asia) Pte. Limited (GDMA), provided husbanding services, including the provision of fuel, food and security for vessels in the US Seventh Fleet operating in the Asia-Pacific region. The award and management of these contracts was heavily influenced by corruption, involving collusion between Francis and US Navy officials. The scandal is estimated to have cost the US Navy at least $35 million, although the real amount may be much higher. As at 30 June 2022, 32 US Navy officials had been found guilty of criminal charges.

The contracting relationship between GDMA and the US Seventh Fleet spanned a 25-year period from the late 1990s until 2013. GDMA was a critical supplier to the Seventh Fleet, the largest fleet in the US Navy responsible for projecting US power across the Pacific Ocean.