Holiday gift giving is a time-honored way of strengthening business relationships around the globe. But with foreign governments cracking down on corruption and enforcement cases skyrocketing, sending the wrong gift to the wrong person could leave a company facing devastating bribery charges.
The U.S. Foreign Corrupt Practices Act (FCPA) allows a little bit of room for nominal gifts on infrequent occasions, as long as they aren’t used to secure a business advantage. However, it’s not enough to simply comply with the FCPA. It’s also important to understand the local bribery laws where you do business.
Anti-corruption laws can be especially hazardous for companies making the transition from private business to public procurement. Many business courtesies that are common in the private sector constitute illegal gifts when offered to public officials — and ignorance of the law is no defense.
The most commonly encountered anti-corruption laws, such as the FCPA, specifically prohibit gifts given with “corrupt intent,” or the intent to influence a government official to gain an unfair business advantage. This means companies need to avoid the appearance of corrupt intent in all business dealings with the government.
When it comes to giving and receiving gifts, the most common problem areas for businesses include:
The business lunch is a time-honored tradition, but treating a government official to a meal can lead your company into dangerous waters.
Lavish meals are off-limits. While the FCPA does allow an occasional modest repast, the value can’t exceed $20 per occasion, with a total value of $50 per year. It’s important to note that the cap applies to the entire governmental organization, not individual employees, and companies can’t wriggle around it by allowing the government official to foot the difference.
To avoid a violation, your gift and hospitality guidelines should emphasize the legal value cap on gifts and include a mechanism for carefully tracking the total value of gifts provided to each government official and agency. The safest route is to restrict food gifts to modest refreshments and inexpensive gift baskets the whole office can share.
Many business conferences include built-in recreational activities such as scuba diving or jaunts to a theme park. While it’s legal to offer officials a free pass to widely attended events that benefit their agency as a whole, including expensive entertainment as part of the package violates the law.
Entertainment that all attendees can enjoy as an integral part of the event is permissible, but activities that are “collateral to the event” — in other words, those that occur outside the conference setting — are prohibited if they exceed the $20/$50 rule.
When offering government officials free attendance at an event, make sure the itinerary is strictly business, and don’t include expensive entertainment or recreational activities that aren’t a part of the conference itself.
Transportation is another area where companies can get into trouble. Government contractors frequently find themselves in a position to offer transportation to an official. While it’s a common business hospitality practice, it also falls under the FCPA’s definition of a “gift.”
If the ride is in connection with the official’s job duties, such as traveling between work sites, it’s considered a gift to the agency and is allowed. But if it personally benefits the individual, that’s a potential problem.
For example, a company that extends use of its shuttle bus for a government official’s daily commute to the office has a violation on its hands — unless the shuttle service meets the $20/50 rule or one of the FCPA’s other exceptions.
These are just a few of the areas where businesses tend to trip over anti-bribery laws. By developing gift and hospitality rules that specify what types of gifts are acceptable, companies can avoid a devastating bribery charge.
Additionally, employees need compliance training that reviews anti-corruption laws and addresses your company’s policies on gift giving. Jumpstart your training with our Anti-Corruption/FCPA course.
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