December is a notable month for the Foreign Corrupt Practices Act (FCPA). Forty years ago on December 19, 1977, the FCPA was signed into law by then-President Jimmy Carter.
December is also the month when holiday gift giving is in full swing in many parts of the world. And gift giving, however well-intentioned, can cause people and organizations to run afoul of the FCPA.
The FCPA is intended to prevent bribery of foreign officials as a way of obtaining or retaining business. Bribery includes direct or indirect payments of money or anything of value, to such an official. The definition of “official” is somewhat broad, as is the meaning of the phrase “anything of value.” An innocently-offered gift could be considered something of value, depending on what the gift is and to whom it is being given. Does this mean organizations should not give holiday gifts to its foreign business partners, customers, or suppliers? It does not.
The Resource Guide to the U.S. Foreign Corrupt Practices Act acknowledges that a small gift or token of esteem or gratitude is often an appropriate way for business people to display respect for each other. Appropriate gift giving, it says, is when the gift is given openly and transparently, properly recorded in the giver’s books and records, provided only to reflect esteem or gratitude, and permitted under local law. Examples include items of nominal value that are unlikely to influence an official, including such things as cab fare, reasonable meals and entertainment expenses, or company promotional items. (DOJ and SEC 2012)
Here are some holiday tips for appropriate gift giving:
— Give gifts infrequently, perhaps once or twice a year during the holiday season or to mark an anniversary, for example.
— Avoid opulent or extravagant gifts. Instead, choose gifts of modest value that show appreciation or respect for the recipient and the relationship.
— Select gifts that cannot easily be converted to cash. Instead of gift cards or jewelry, choose company promotional items or perishable items such as flowers or food.
— Give all gifts openly and keep good records.
— Refrain from giving a gift to anyone who is in the midst of making a decision that will affect your business.
— Always follow the corporate gift-giving policy. If you don’t have such a policy, consider creating one.
Take some time this holiday season to remind all employees about the guidelines for giving and receiving gifts. Such a reminder will help them avoid potential problems while also giving and receiving gifts in the spirit of the season.
Ethical Advocate provides comprehensive ethics and compliance solutions, including ethics and compliance training and confidential and anonymous hotlines, meeting regulatory and reporting needs such as those encouraged by the FCPA. Contact us for more information.
U.S. Department of Justice and U.S. Securities and Exchange Commission. Resource Guide to the U.S. Foreign Corrupt Practices Act, November 2012.