While the holiday season has drawn to a close and gift-giving may be the last thing on your mind, now is the perfect time of year to review your company's gift, travel, and entertainment policies -- making changes now to prevent any violations for 2017.
As stressful as finding the right present for grandma may be, once a business begins providing gifts -- either direct items or indirect services like travel or entertainment -- to potential customers or other outside parties, things only get more complicated as companies risk running afoul of the Foreign Corrupt Practices Act (FCPA).
Concerned that your gift-giving and other anti-corruption policies aren't being properly followed? Read our Code of Conduct Training Best Practices resource guide to learn how to best communicate your company's values and ethics to your employees.
Back in 2012, the Department of Justice (DOJ) and the Securities Exchange Commission (SEC) jointly produced a resource guide intended to help businesses comply with the act. The guide offers a number of detailed examples that offer insight into allowable and problematic practices.
As part of the advice given in the resource guide, the agencies make it clear that they will "give meaningful credit to a company that implements in good faith a comprehensive, risk-based compliance program."
The first step in creating such a program is drafting clear policies that dictate what is and is not acceptable behavior. As rules can vary between geographies, work with legal counsel and outside experts to identify appropriate limits, developing unique policies for gift-giving, travel, and entertainment.
As part of your rule set, you should require advance approval for engaging in any of these activities. By removing responsibility from the individual employee in the field, your organization can more easily avoid inappropriate gifts.
Any purchases made on behalf of clients or officials should be thoroughly monitored. When recording these gifts, your staff should note:
Similar information should be captured when your employees receive gifts as well.
If possible, your firm should invest in tracking software that can detect financial irregularities. A single gift to a potential customer may not be inappropriate or set off any red flags, but if that gift is a part of a weekly batch of incentives from a rotating group of employees, your business should be concerned.
Unscrupulous employees will always try to find a way to work the system, so you should offer them as few opportunities as possible. And only by evaluating each gift request in context can your business make truly sound decisions regarding payments.
Back in 2014, 75 percent of the foreign bribery cases prosecuted in the United States involved payments made through third parties.
Further, in the previously mentioned resource guide, the DOJ and SEC make it clear that your business can be held criminally liable for third party actions even if you have no direct evidence of illegal activity -- all that is required is for your business to be aware of a "high probability" that a bribe was offered.
Given the limited amount of oversight available for these outside parties, your business should be on the lookout for any potential red flags.
No matter how detailed and nuanced your gift, travel, and entertainment compliance program is, it is useless if your employees don't know it exists. Keep your staff in line with corporate policy by offering regular training.
Ideally, your education program should extend beyond just company guidelines to provide a thorough understanding of the legal ramifications of gift-giving to the individual employee as well as the larger business.
A properly educated workforce is less likely to make judgment errors that will invite regulatory investigations.
Both the DOJ and SEC have historically shown leniency to companies that self-reported any violations. In fact, in April 2016, the DOJ initiated a pilot program that was designed to formalize the offering of mitigation credit for any business that proactively reported infractions.
Whatever policy your business has in place related to gifts, travel, and entertainment, you should review these guidelines regularly. Laws can change quickly, and new legal precedents are routinely set regarding what expenses are considered "reasonable."
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