Small payments to speed up government services may sound harmless, but under the Foreign Corrupt Practices Act (FCPA), they can cause serious problems. The law allows a narrow exception for “facilitating” or “grease” payments, yet in practice, these transactions often attract close attention from regulators.
What counts as a grease payment
A grease payment is money given to a government official to perform routine, non-discretionary actions faster. Examples include expediting permits, processing visas, or connecting utilities. The FCPA technically permits these payments if they only help move along standard procedures. However, the definition of “routine” is narrow, and what seems like a small shortcut can quickly cross into bribery territory.
Why regulators still pay attention
The Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) view grease payments with suspicion. If there is any sign that the payment influenced a decision, secured new business, or offered an unfair advantage, it may be treated as a bribe under the FCPA. Even payments that qualify as facilitating must be accurately recorded in a company’s books, or they can trigger accounting violations. This means businesses face risks not just from the payment itself but also from how it is documented.
How global laws make it riskier
Many countries do not recognize a grease payment exception at all. A transaction allowed under the FCPA might still break local anti-bribery laws, creating additional legal exposure. Companies with international operations often choose to ban grease payments entirely to avoid the risk of conflicting regulations and enforcement actions. This zero-tolerance approach also simplifies compliance training for employees and contractors
Setting a clear corporate policy
The safest approach is a clear, enforceable policy that addresses facilitating payments directly. Training programs should explain what qualifies, when they are prohibited, and how to handle situations where a foreign official requests one. Employees should have a channel to seek guidance before making any payment.
Understanding the narrow scope of grease payment exceptions helps organizations avoid costly investigations. Staying informed and proactive can protect a company’s reputation and keep its operations within legal boundaries.