This Anti-Corruption Helpdesk brief was produced in response to a query from one of Transparency International’s national chapters. The Anti-Corruption Helpdesk is operated by Transparency International and funded by the European Union.
Query
What is the evidence of the damage caused by facilitation payments and what are the most effective counter-arguments to those who wish to allow them?
CONTENT
1. Evidence of impact
2. The case for prohibiting facilitation payments
3. References
SUMMARY
Facilitation payments typically refer to small bribes paid to public officials by private citizens to speed up bureaucratic processes and access services the payer is lawfully entitled to. Facilitation payments are universally prohibited in the national laws or public service regulations of countries where they are paid, but some countries allow the payment of small bribes to foreign officials to access services.
Although some authors have argued that facilitation payments can “grease the wheels” of commerce by reducing transaction costs induced by cumbersome regulations and administrative processes, there is a large body of evidence indicating that such an approach is costly, harmful for firms’ growth and productivity, legally risky and ultimately economically inefficient for companies. Evidence shows that they have a detrimental long term effect on the operations companies, undermine their internal culture and ethical standards, and make them preferential targets for more and greater demands.
At the country level, there is also evidence that facilitation payments have a corrosive’ effect on the overall governance environment and the efficiency of the state apparatus, erode the ability of the government to collect revenues from formal tax channels, and ultimately undermine sustainable economic development and the rule of law.
Authors
Marie Chêne, Transparency International, [email protected]Reviewers
Robin Hodess, Ph.D., Transparency International; Karen Egger, Transparency InternationalDate
01/07/2013
