The Snowball Effect or How Small Bribes Create Huge Problems

How often have you encountered situations in business or your personal life, when making a small unofficial payment would make your life or business easier and more favorable? How often have you had a temptation to speed-up certain processes or procedures for your own benefit by making facilitation payments? I think in Ukraine such situations happen from time to time and you have to make a decision either to abide the law and bear time or money losses or to violate the law for your own comfort by paying a small bribe.

For the purposes of this post, let’s consider as small bribes facilitation payments as well as minor payments made to induce improper action. Yes, even a small “gratitude” is bribery and not only in Ukraine.

According to Guidance to UK Bribery Act “facilitation payments, which are payments to induce officials to perform routine functions they are otherwise obligated to perform, are bribes. There was no exemption for such payments under the previous law nor is there under the Bribery Act.” However, while facilitation payments are illegal in most countries, Australia, New Zealand, South Korea, and the USA allow, in certain circumstances, for facilitation payments when paid abroad. It should be noted, though, that they remain illegal in their own domestic laws.

A single bribe may be small by itself, but, very often, small bribes are paid regularly during a long period, so amounts become considerable. Therefore, notwithstanding its relatively low amount, negative impact of small bribes is huge and should not be underestimated.

According to Transparency International UK Report “Countering Small Bribes” of 2014, “paying small bribes feeds a climate of corruption, which creates an unstable operating environment for companies. It destroys trust in government and public administration, undermines the rule of law, damages human rights and distorts business transactions. Small bribes are not confined to demands made to companies, as there are no boundaries for officials and others who demand bribes. The effects in countries with high levels of corruption can be widespread. In such circumstances, businesses and citizens may face daily demands for payments for essential transactions, increasing the costs of living to citizens and adding costs and uncertainties to business.”

The Report also defines principles for countering small bribes and challenges for the business and providing forms of checklist and red flags to ensure anti-bribery compliance. Transparency International also provides a free training module with comprehensive anti-bribery training, including in relation to facilitation payments. It also enables companies to benchmark their own training programs against the best practice standard.

It is important to remember that in aggregate, many small bribes amount to large-scale bribery: a company might easily discover that it is paying hundreds of thousands each year in so-called small bribes. Therefore, small bribes and facilitation payments are a corrosive phenomenon, and companies should seriously consider the risks arising from such payments. In my opinion, businesses should not tolerate bribery for any reason or in any amount and should not make any, even minor, facilitating or gratitude payments, regardless of what the reasons might be.

Paying small amounts is proven to incur repeated demand (often for larger bribes), making it more difficult to get thing done over the medium and long term. Moreover, improper payments by one employee may signal to others that the company does not always mean what it says and that some violations are acceptable, paving the way for more (and greater) misconduct. Finally, bribery undermines the rule of law and debilitates the well-being of society. As a result, a company might face legal, financial, reputational and operational risks in case the issue of small bribery is not addressed timely and properly.  

So, as the journey starts with the first step, big bribery starts with a small bribe that is further growing like a snowball. The more bribery is tolerated, the more difficult it is to tackle it in future. Like other changes in society and business, it is of a paramount importance to change the system from the bottom to the top,  which in our case means that we will never tackle big corruption while small bribery blossoms.

Businesses should not wait until newly established anti-corruption authorities will eliminate corruption among Ukrainian top officials, but should start preventing even the smallest bribes by creating a supporting culture of integrity and transparency that are of a paramount importance for fighting corruption. Yes, it might be painful in a short term, but its benefits in terms of sustainable development and capitalization in a long-term will definitely compensate short-term losses.

Stay tuned and be compliant!


Volodymyr Grabchak is a legal counsel with an international FMCG company, responsible, inter alia for anti-corruption compliance issues in Ukraine and Moldova. He got his law degree in Ukraine and LL.M. degree in the Netherlands. 

Volodymyr is attorney at law admitted to Ukrainian Bar and a member of the International Bar Association (IBA).