If there was ever an example of the insidious nature of bribery and corruption of foreign government officials, it is how pop star Justin Bieber gained entry into Canada for his entourage.

It is not that Canadian border guards allowed The Bieb himself into Canada for a little something extra; he is, after all, a Canadian citizen—although the good-taste police might have something to say about letting him in. No, it was the bribe paid by Bieber’s entourage to allow two Americans with criminal records into the country that highlights the dangers of facilitation payments, how simple it can be for employees to make them, and the legal questions they raise.

According to The Huffington Post, a supervisor at a Niagara Falls border crossing was fired after accepting a bribe worth $10,000 in backstage passes to Justin Bieber concerts. The Canadian Border Services Agency fired the guard after she allegedly took the bribe from someone in the Canadian pop star's posse. According to another report, the bribe surfaced when other friends of Bieber’s, also barred from entering Canada on the basis of their criminal records, approached Canadian border guards looking for similar treatment weeks later.

What Is a Facilitation Payment?

Make no mistake, facilitation payments are bribes, yet there are other gray areas around them that can create confusion and make it hard for companies to police them. For one, they are exempted out as violations of the Foreign Corrupt Practices Act. Indeed in a recent FCPA prosecution brought by the Securities and Exchange Commission, a federal district court ruled that the government has the burden of proof to demonstrate the exemption does not apply.

Let’s start with a definition: A facilitation payment is a small bribe that is paid to help “grease” the delivery of a service. The payments are enumerated in the FCPA as: “obtaining permits, licenses, or other official documents; processing governmental papers such as visas and work orders; providing police protection, mail services, scheduling inspections; providing utilities, cargo handling; or actions of a similar nature.” Moreover, a facilitation payment involves a routine governmental action in these very narrow categories of largely non-discretionary, ministerial activities performed by mid- or low-level foreign functionaries.

Many compliance practitioners still struggle with the issue of facilitation payments; what is a facilitation payment and whether their company should allow them going forward. So what does the Department of Justice look at when it reviews an FCPA compliance program with regard to facilitation payments? Initially, if there is a pattern of such small payments, it would raise a red flag and cause additional investigations, but this would not be the end of the inquiry. There are several other factors that the Justice Department could look toward in making a final determination on this issue. The line of inquiry the agency could take might be as follows:

What is the quantum of the facilitation payment? There is no outer limit where a facilitation payment becomes a bribe, but there is some line where the perception shifts. If a facilitating payment is over $100 you are not arguing with the government from a position of strength, and presumption of good faith may well be against you. You might be able to persuade the government that an amount under $100 is a facilitation payment, but anything over this amount and the government may well make further inquiries. So, for instance, the Justice Department might say that all facilitation payments should be accumulated together and this would be a pattern and practice of bribery.

What is a routine governmental action? Is your company entitled to this benefit that it received? Has your company met all of our requirements to obtain the license, permit, or government services? Conversely, is your company asking the government official to look the other way on some requirement? The key inquiry a regulator would make is whether you are entitled to the action you received.

When does the seniority of the governmental official matter? This is significant because it changes the presumption of whether something is truly discretionary. At the border, a customs official or border guard may have little discretionary authority to deny your entry, unless, of course, you are with Bieber’s posse and are asking for something you are not entitled to receive. The higher the level of the governmental official involved, however, the greater chance his decision is discretionary.

Does the action have to be non-discretionary? This inquiry is important because if the government official’s decision is discretionary, then a facilitation payment made will appear to be obtaining some advantage that is not available to others. In other words, a bribe.

What internal approvals should be required? A facilitation payment is something that must be done with an appropriate procedure. You can set some low dollar limit under which employees have the discretion to make such payments without prior approval. At higher dollar thresholds or increased frequency so that an aggregate exceeds your threshold, however, your company should lay out a process. The decision should be made by people who are the experts within the company on such matters, and it must be documented.

What is the risk of facilitation payments and third parties?  High. Whatever facilitation payment policy your company has decided to employ, it must be carried over to third parties acting on your behalf or at your direction. If a third party cannot control this issue, the better compliance practice would be to end the business relationship. In the Beiber case, for example, the singer was not the one making the payment, but the action by his associate could easily land him, his touring company, and others in hot water.

How should facilitation payments be recorded? Here, always remember the three most important things about any FCPA compliance program: Document, Document, and Document. Facilitation payments must be accurately recorded in your company’s books and records. You should have a category entitled “Facilitation Payments” in your company’s internal accounting system. The labeling should be quite clear, as they are critical to any audit trail.

Should you monitor facilitation payments? Absolutely. Your company should always be monitoring to review your company’s internal controls, policies, and procedures regarding facilitation payments. If your company has a large number of such payments, transaction monitoring should be used to run large amounts of data, along with more focused and deeper dive audits as appropriate.

So we return to the question of when does a grease payment become a bribe? There is no clear line of demarcation. The test seems to turn on the amount of money involved, to whom it is paid, and the frequency of the payments.

As for Justin Bieber, did he violate the FCPA when his entourage bribed a Canadian government official? He may well have. This may yet add to his well-publicized legal woes. On the positive side, if due diligence shows he or his entourage is shown to have a propensity for bribery and corruption, perhaps they will all be denied entry back into the United States.

Now that’s an idea that I can be a Belieber in!

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