What is a Facilitating Payment?

A facilitating payment is a small bribe made to expedite the performance of a routine or necessary action to which the payer is already entitled. For example, an international corporation wants to set up a new subsidiary in a country in which it has never done business before. In this country, the massive amount of time required to obtain the necessary permits is legendary. Accordingly, the company’s in-country representative makes a number of facilitating payments to show his appreciation to various government agencies for their prompt attention to his company’s licensing needs. Facilitating payments are usually made to government officials.

As another example, a traveler is passing through the airport of a small pacific island nation, where the national airline is notorious for losing passenger luggage. The traveler makes a small cash payment to a baggage attendant to ensure that the baggage will be delivered to the correct plane in a timely manner. This payment can be classified as a facilitating payment, since it is essentially expediting the luggage delivery, to which the person was already entitled.

The Legality of Facilitating Payments

The legal treatment of facilitating payments varies by jurisdiction – some consider it illegal, while others do not. In some countries, low-income officials need these payments to supplement their exceedingly low incomes. In these places, facilitating payments are not considered to be bribes, as long as the paying party is not doing so in order to gain an improper advantage over other parties. An increasing number of international corporations frown upon the use of facilitating payments, since it conflicts with their corporate governance mandates.

Facilitating Payment vs. Bribes

The key difference between a facilitating payment and a bribe is that a bribe is intended to acquire a new benefit to which the payer is not already entitled, while a facilitating payment is intended to increase the speed of delivery of a service to which the payer is already entitled.