In some countries it is known that payments can be made to local public servants to speed
Question:
In some countries it is known that payments can be made to local public servants to speed up the approval of permits, licences and other processes. These have been called facilitation payments but could otherwise be termed bribes. While countries such as the United States and the United Kingdom have banned companies headquartered in their countries making facilitation payments, other countries are yet to do so.
1. What is the difference, if any, between a facilitation payment and a bribe?
2. Discuss whether you would consider the following situations as being a facilitation payment or a bribe?
a. A company pays $100 to a local official to arrange for fast approval of a visa for the overseas managing director to visit
b. A company pays $100 000 to a local official to support the company's tender bid to provide services to the local government
c. A company documents a $100 000 payment to a local official in the minutes of the board meeting and it is approved by the board of directors
d. A company claims a tax deduction for the $100 payment to the local official
e. The managing director believes that all payments are facilitation payments because 'that is how business is done here and everyone else is doing it'.
Step by Step Answer:
Financial Accounting An Integrated Approach
ISBN: 9780170349680
6th Edition
Authors: Ken Trotman, Michael Gibbins, Elizabeth Carson