As A Resource Guide to US FCPA* acknowledges, the FCPA does not have a minimum threshold amount for corrupt gifts or payments – which can include providing travel, meals or entertainment. The Guide further advises that gifts of nominal value are unlikely to result in enforcement action when they are “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.”
The guidelines companies develop to reflect these principles can vary widely, to address the different industries, cultures and environments in which they operate. While this variety can be frustrating to those seeking definitive guidance, a program and guidelines developed to address a company’s specific risk profile in specific markets is critical, providing useful direction in day-to-day relationships and operations.
Some of the trends seen recently at different companies include:
- Setting global limits on the amount that may be spent on any single meal, with three tiers covering low, medium and high cost markets. For example, the lowest tier of locations could include smaller, less costly cities and might limit the cost of a dinner to $100. The highest tier would encompass major global cities like London and Moscow and might set a limit of $150.
- Limiting gift giving, globally, to no more than $50 worth of low-value items which may begiven at any one time to a single individual, with a cap of no more than four gifts annually (maximum total value of $400) – in order to address markets which have local customs of gift-giving at multiple times during the year (such as China’s Spring Festival and Autumn Festival).
- Requiring all gifts to be sourced centrally by procurement and prohibiting the use of vouchers or gift cards that can be easily converted to cash.
- Requiring any gift, meal, entertainment or travel provided for the benefit of a government official to be approved in writing in advance by a global compliance/risk management committee, which meets regularly to review all such requests.
- Mandating prior written approval from a regional or above-country compliance officer if an employee wants to provide more than two gifts yearly to any single recipient (whether or not a government official)Prohibiting payment for travel or other costs for government officials to attend overseas conferences.
- Using a specific, documented process to address hospitality provided for high-profile, unique events in countries where the company has a large presence or business interests – for instance, the London Olympics.
- Mandating that all travel paid for in conjunction with business meetings, either for company employees or others (including vendors, suppliers and government officials) be arranged by the company and booked through the company’s designated travel agency.
- Restricting use of cash in markets where credit cards are readily accepted at restaurants where business meals may take place.
- Requiring varying levels of compliance officers (local, regional and global) to approve different expenditures on behalf of external parties, depending on the monetary amount requested.
- Adopting and publishing to employees a list of specific types of locations where conferences, entertainment, meals or travel are not permitted – such as lavish spas or resorts, high-priced restaurants and adult entertainment venues.
- Requiring a set ratio of employees to external parties to participate in certain events to reduce the risk of providing entertainment without a reasonable business purpose.
- Prohibiting the giving of company products for personal use at a free or discounted rate.
- Eliminating petty cash funds that may be tapped for expenses.
- Keying to specific roles, responsibilities and needs the authority for the type of expenses employees can incur. For example, only certain employees receive company credit cards; most personnel must have prior written approval to incur certain types of expenses.
Proactive companies continue to hone their gifts and entertainment policies and practices in light of ongoing, intense enforcement efforts by the US, UK and other authorities. The above examples may not be feasible or practical for all companies in combatting their specific risks of bribery and corruption. They are useful, however, in illustrating ways to implement steps that can offer specific guidance in day-to-day operations.