As the holiday season approaches, companies that operate internationally are well-advised to remind their employees and agents about rules for gift-giving to foreign public officials. No company or individual wants to end up in a position of having given a gift in good faith to a foreign public official that would be considered offside Canada’s Corruption of Foreign Public Officials Act or the US’s Foreign Corrupt Practices Act (“FCPA”). Though neither law contains a materiality threshold, it is highly unlikely, unless the gift was considered lavish in the context, that authorities would choose to investigate or prosecute a company for providing a gift of moderate value in appropriate circumstances to a foreign public official. In fact, recently released guidance from the US Department of Justice and Securities and Exchange Commission on the FCPA states:
“…it is difficult to envision any scenario in which the provision of cups of coffee, taxi fare, or company promotional items of nominal value would ever evidence corrupt intent, and neither DOJ nor SEC has ever pursued an investigation on the basis of such conduct.”
Careful consideration of the context of the gift is key when evaluating whether the gift has crossed the line. The most important contextual factors that should be evaluated prior to gift-giving include:
- whether the gift is frequent in nature – if the gift is one more in a series that, on the whole, looks more like a drawn out attempt at bribery, it might easily be considered a bribe;
- whether the gift is appropriate in the culture in which it’s being given – some gifts that would be considered normal in North America might be considered lavish abroad. Err on the side of caution by avoiding expensive gifts; the more valuable a gift, the riskier it gets no matter what the occasion, or seniority of the recipient public official;
- whether the recipient public official is in the midst of making a decision that could affect the company’s business interests – timing is everything; moderate gifts that commemorate a special occasion where gifts are normally exchanged (e.g., special holidays, weddings, the opening of a new facility, etc.) are usually okay, but gifts given during the course of trying to secure a government contract or permit are at risk of being seen as an inducement to exert influence on the official decision-making process.
Risk can also be reduced by never giving cash or gifts easily convertible to cash (e.g., gift cards, jewelry, etc.), even where it may appear culturally insensitive not to do so. A safe bet is to give a gift that promotes the company’s wares or services such as company logo’d promotional items. The further one deviates from these types of gifts, the more important it is to evaluate the appropriateness of the gift in light of the context in which it is being given.