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Among Fortune 500 companies, only 19 of those with public codes of conduct prohibit their employees from making so-called “grease payments” to foreign officials. But a whopping 373 companies deal with the same issue by simply not mentioning it at all in their codes of conduct, according to a new study. Under the Foreign Corrupt Practices Act, a facilitation or grease payment is legal if made to a foreign official, political party, or party official for “routine government action,” such as processing papers or issuing permits in order to expedite an act that would occur anyway. The payment becomes a bribe, however, if it attempts to influence the outcome of an official’s action—such as approval of a permit—rather than the timing of it. One of the 19 companies that are explicit about banning this kind of payment is Cincinnati-based Procter & Gamble Company. “At P&G, we strive to do the right thing, and this often means that our policies exceed legal requirements,” said Libby Rutherford, P&G’s vice president and general counsel for global compliance. Rutherford explained, “We know that bribery harms the company and the communities in which we do business. P&G’s policy is to prohibit facilitating payments worldwide, even though they are permissible under U.S. law. In this regard, we support government efforts around the world in combating bribery, while helping to improve local communities.” But there are plenty of companies out there that apparently don’t feel the same way, based on research into public corporate codes of conduct done by attorney Ryan McConnell and two colleagues at Haynes and Boone law firm in Houston. Many of these companies simply omit guidance on facilitation payments, and that could end up being a risky ploy. The payments are coming under increasing scrutiny by the U.S. Justice Department, and are the subject of increasing criticism by other countries. Last year Angel Gurría, secretary-general of the international anti-bribery group called Organisation for Economic Co-operation and Development, called grease payments “corrosive. . . particularly on sustainable economic development and the rule of law.” A 2009 benchmark survey by the anti-bribery group TRACE International found that almost 60 percent of corporate respondents reported that facilitation payments pose a medium-to-high risk of violating the FCPA, especially the books and records provisions. It also found that over 50 percent believed a company is moderately-to-highly likely to face a government investigation or prosecution related to facilitation payments. Do companies really want to take that risk? Apparently some do, according to the Haynes and Boone study. Besides the corporations that don’t even mention the payments, the study found another 68 companies that explicitly allow facilitation payments—though most of these policies require prior approval. But it found 29 other companies that discourage or strongly discourage facilitation payments, using such language as, “every effort must be made to eliminate or minimize such payments.” Some of these companies—including Exxon Mobil Corporation and General Electric Company—have policies prohibiting the payments, except in rare circumstances. The group of 373 companies that do not mention grease payments in their codes of conduct are led by such giants as Wal-Mart Stores Inc., Chevron Corporation, and Bank of America Corporation. It is possible that some of these corporations still restrict such payments but don’t say so in their public codes. The study said that 489 companies in the Fortune 500 make public their codes of conduct, while only 11, topped by the Liberty Mutual insurance group, do not. See a complete breakdown of all Fortune 500 companies here [PDF].

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