Commission warns international NGOs against paying backhanders 1

Finance | Tania Mason | 25 Jul 2011

Charities that work overseas in areas where it is accepted practice to make “facilitation payments” in order to speed up a service must be aware that doing so could see them fall foul of the new Bribery Act, the Charity Commission has warned.

The Commission has just published guidance on the Act, which came into force this month. It states that: “In some areas of activity and in some parts of the world, bribery can be found to be more deeply embedded in cultures, and charity officials might be tempted to adopt and confirm to prevailing customs or local standards and values.”

However, “trustees should avoid any situation where there is an expectation of a gift or payment in return for an advantage of any kind”, the guidance states.

Even if facilitation payments are the norm in the local culture, and even if charitable need is extreme, “they are still bribery payments and therefore an unacceptable use of charity funds”.

Payments made under duress

However, the Commission acknowledged that sometimes such payments are demanded under duress and said that guidance from the Ministry of Justice and Serious Fraud Office recognises that there may be exceptional situations where it is necessary to make facilitation payments “to ensure the safety of charity personnel”.

Prosecutors would be likely to take action over large or repeated payments, payments that are planned as a standard part of business, and failure to follow the charity’s bribery policy and procedures, the guidance says.

But charities that make a small, one-off payment, report it immediately and take action to ensure it doesn’t happen again, are unlikely to face prosecution. Equally, payments made under duress will not be prosecuted.

The regulator outlines issues that international NGOs shoud consider when deciding to partner with other organisations locally to ensure they stay on the right side of the law.

It also advises all charities to devise clear guidance to trustees, staff and volunteers on business entertainment, gifts and hospitality.

Directory: Charity Commission

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Katherine Smithson
Charity Finance Directors' Group
25 Jul 2011

Great to see the Commission has something out so soon after the implementation date on what is a tricky subject. Mango and TIUK coordinated a group of NGOs, which CFDG sat on, that are implementing anti-bribery policies within their organisations. They developed some principles based guidance. These are by the sector for the sector and also well worth a look at: http://www.cfdg.org.uk/~/media/Files/Resources/CFDG%20Publications/NGO_Anti-bribery_Principles_and_Guidance_Final.ashx

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