Receptions, gift-giving and other hospitality are common during the holiday season to show appreciation to customers for their business over the last year. Service providers and vendors have to be careful though when their customers are part of the public sector. The federal government, provincial governments, and the vast majority of larger regional and municipal governments across Canada each have their own legislation, codes of conduct or corporate policies containing rules on gift and hospitality acceptance by public officials and employees. In addition, employees of government agencies and crown corporations, and other public sector institutions such as hospitals, school boards, universities, and other organizations receiving significant public funding, may be subject to the same rules as government employees and/or additional gift and hospitality rules.
The array of gift and hospitality rules applicable to public sector employees is far too large for service providers and vendors to reduce to a one-size-fits-all approach. However, the aim of this article is to at least provide a general explanation to help guide service providers and vendors when offering small gifts or hospitality to public officials or employees of their public sector customers.
General Prohibitions and Exceptions
Most laws, codes of conduct and corporate policies that deal with gift and hospitality acceptance contain a general prohibition against accepting any benefit that could lead to an actual or perceived conflict of interest. For example, the Model Organizational Code for Public Sector Organizations issued by the federal Treasury Board Secretariat, and which applies as a minimum standard to all public servants working in federal departments, agencies and certain other public institutions, states:
“Public servants are not to accept any gifts, hospitality or other benefits that may have a real, apparent or potential influence on their objectivity in carrying out their official duties or that may place them under obligation to the donor.”
The general prohibition against acceptance is typically followed by exceptions where the acceptance of a gift or hospitality would not be seen to create a conflict of interest and would be within normal standards of business courtesy. These exceptions tend to be broadly worded to leave discretion with the employees’ superiors to determine whether the gift or hospitality is acceptable. For example, despite the general prohibition found in the Treasury Board’s Model Code, a gift, hospitality or other benefit is acceptable if it satisfies all of the following criteria:
it is infrequent,
it is of a minimal value,
it is within normal standards of courtesy or protocol,
it arises out of activities or events related to the official duties of the public servant, and
it does not compromise or appear to compromise the integrity of the public servant or of his or her organization.
It is important to emphasize that the Model Code only serves as a minimum standard, and each federal government department, agency and other public institution has the authority to pass its own set of gift and hospitality rules, so long as they meet the minimum standards in the Model Code. For example, Public Works and Government Services Canada has implemented its own code entitled Public Works and Government Services Canada and the Private Sector: Fostering an Ethical Relationship with more detailed gift and hospitality acceptance rules.
Who is Responsible?
Almost always, the general prohibition against the acceptance of gifts and hospitality applies to the government official or employee. That is, the acceptance of the gift, and not necessarily the giving of the gift, is caught by the rule. However, on a practical level, this distinction may be immaterial. It is important for a service provider or vendor to the public sector to ensure they are onside of public sector gift and hospitality rules, otherwise they run the risk of negative media attention and reputational harm, both with the public and their customers. Offering inappropriate gifts and potentially putting public sector employees offside of these rules could affect the vendor’s business and its existing and future procurement opportunities.
In 2007, five City of Ottawa officials were seen at an NHL playoff game in a corporate box that belonged to Waste Management, which was seeking unpopular zoning changes for a landfill expansion at the time. The investigation received extensive media attention and it looked equally bad on the city officials and the service provider. Six years later, the landfill expansion project has still not begun, and while it is unpopular for a number of reasons, Waste Management’s conduct at the outset certainly did not help its cause.
Dollar Limits and Disclosure Thresholds
While most laws, codes of conduct or policies do not establish dollar-value limits for whether a gift or hospitality may be accepted, many jurisdictions do establish a threshold ─ at least for elected officials ─ that determines whether the gift or hospitality must be disclosed. In some jurisdictions, disclosures become public; in other jurisdictions, disclosures remain with the appropriate ethics authority.
The disclosure thresholds that apply to benefits received by elected officials are typically $200 or $250. The lowest is $150 (Yukon Territory) and the highest is $500 (Newfoundland and Labrador, Prince Edward Island). Usually the threshold applies both to single benefits and to the cumulative value of multiple benefits from the same source during a one-year period.
A common misconception (among both government officials and gift givers) is that the disclosure threshold determines whether a gift, hospitality or other benefit is acceptable. It is frequently, and wrongly, assumed that when the value falls below the disclosure threshold, the benefit can always be accepted. This is incorrect. No matter how small the value, a public official or public sector employee cannot accept a gift, hospitality or other benefit that could influence or be perceived to influence that individual in the course of their duties (the exact wording of the rule varies by jurisdiction). In other words, accepting even a gift of nominal value could be in breach of conflict of interest laws or other gift and hospitality rules if it could be reasonably seen as having an influence over a decision-maker.
Modesty is the Best Policy
Reducing the conflict of interest laws for public officials across all jurisdictions, and the various codes of conduct and corporate policies on gifts and hospitality for public sector employees, to one set of rules is impossible. That said, the best strategy to ensure compliance is to keep any gifts and hospitality as modest as possible. Small token items such as pens, notepads and other trinkets are not likely to influence (or be seen to influence) a public sector employee, but a bottle of wine might. Similarly, a modest lunch with a legitimate business purpose is not likely to offend, but a lavish dinner or an open-bar reception would violate most gift and hospitality acceptance rules. Of course, what is acceptable and what is not acceptable will depend upon the relevant laws or rules, and a number of contextual factors.
Service providers and vendors dealing with government officials and public sector employees should be aware of the applicable legislation, and review the gift and hospitality rules relevant to each of their public sector customers. Even though the responsibility might ultimately lie with the recipient, the reputational risk to the gift-giver, with both the customer and the public, warrants discretion and an appropriate compliance policy.