Grease payments, also known as facilitating payments, are routine payments to government officials to speed up already set processes. This article explains what grease payments are, their legal status under U.S. law and international contexts, and practical steps for compliance. It also outlines how businesses can navigate these payments responsibly while minimizing legal and reputational risk.
What Is A Grease Payment
A grease payment is a payment made to a government official to encourage the timely performance of a routine, non-discretionary action. Examples include expediting a permit, processing a visa, or releasing goods held at customs. The payment is typically small and intended to ensure an action that the official would normally complete without undue delay.
Key distinctions matter. A grease payment differs from a bribe intended to influence a discretionary decision or to secure an improper advantage. In such cases, the objective is not simply speed but to obtain favorable treatment or a decision.
There is often confusion between facilitating payments and bribery. While facilitating payments aim to speed routine actions, they can still raise ethical concerns and complicate enforcement, especially for multinational firms operating under a complex web of laws.
Is It Legal Under U.S. Law?
Under United States law, the Foreign Corrupt Practices Act (FCPA) prohibits bribery of foreign officials to obtain or retain business. The FCPA does allow facilitating payments in limited circumstances to expedite routine governmental actions, provided the payments are lawful where made, not to influence an official’s decision, and do not involve obtaining a business advantage.
Recent enforcement and guidance emphasize that while facilitating payments may be technically permissible in some jurisdictions, they carry significant compliance risk for U.S. companies and individuals. Companies must document the payments, ensure they are truly for routine actions, and avoid payments that could be construed as kickbacks or bribes. The Department of Justice and the Securities and Exchange Commission advise robust internal controls and due diligence.
Several caveats apply. Facilitating payments are illegal in many other countries, and multinational firms must align with a global anti-bribery policy. The safer corporate approach is to prohibit facilitating payments and instead seek legitimate channels for expediting actions, such as official processes, government liaison services, or contractual timeframes with clearly defined service levels.
Global Perspectives and Risks
Globally, laws on facilitating payments vary widely. Countries with strict anti-bribery regimes often prohibit any payment intended to secure favorable action, regardless of the payment’s size. In jurisdictions where facilitating payments are permissible, they are still subject to strong scrutiny, corporate policy, and reputational risk.
For U.S. and multinational operations, the risk calculus includes: potential liability under the FCPA, exposure to civil or criminal penalties, and damage to shareholder value and brand trust. Additionally, the modern compliance landscape increasingly favors transparency and traceability, making even small facilitating payments potentially costly in audits or investigations.
Interacting with foreign officials can also implicate other laws, such as anti-money-laundering statutes, anti-bribery provisions under the UK Bribery Act, and local regulations. A holistic approach considers all applicable laws, not only the permissibility of a single payment.
Practical Guidance For Compliance
Organizations should implement a clear policy that prohibits payments intended to influence discretionary actions. Establish a formal approval process, with senior oversight for any request to expedite government actions. Documentation should include the payer, recipient, amount, purpose, and the action requested, along with a justification showing it is a routine, non-discretionary task.
Key compliance steps include:
- Conduct a risk assessment by country, project, and government contact to identify high-risk scenarios.
- Institute strict due diligence for third-party intermediaries who interact with government officials.
- Provide regular training on FCPA, anti-bribery laws, and internal policies.
- Maintain robust accounting controls and accurate book entries to ensure traceability.
- Institute a reporting mechanism for employees to flag potential improper payments without fear of retaliation.
In case a request for a facilitating payment arises, the recommended approach is to refuse and seek lawful alternatives, such as standard processing channels, expediting through official timelines, or engaging with government offices through formal compliance channels. If a payment is unavoidable under local law, consult corporate counsel and document the rationale and approvals meticulously.
Alternatives To Facilitate Legitimately
Companies can optimize operations without resorting to facilitating payments by focusing on predictable processes and risk-managed timelines. Strategies include:
- Negotiating clearer service levels, deadlines, and penalties with government agencies where applicable.
- Utilizing accredited local partners who understand the regulatory environment and compliance requirements.
- Employing digital or formalized submission platforms that reduce manual delays and errors in the process.
- Allocating resources to compliance tasks that anticipate bottlenecks, enabling proactive coordination with authorities.
Transparency is a powerful deterrent to improper payments. Publishing a clear policy, maintaining accessible records, and conducting periodic audits can reinforce a culture of integrity while supporting legitimate operational efficiency.
Key Takeaways
Grease payments are intended to speed routine governmental actions. In the United States, the FCPA allows them only under narrow, well-documented circumstances, and many international regimes prohibit them outright. Companies should prioritize robust anti-bribery policies, due diligence, and transparent record-keeping to mitigate legal and reputational risk.
Best practice is to avoid facilitating payments when possible. Use official processes, documented approvals, and legitimate channels to obtain timely government actions. When in doubt, seek legal counsel and adhere to a comprehensive compliance program to navigate complex international regulations.