Could a simple gift be a nuisance to a company? Depending on the situation and the parties involved, it certainly can!
While a gift can be seen as a gesture of kindness and courtesy in some circumstances, the same gift with same value may be characterized at the very least as a serious factor for conflict of interest, which can materialize an act of corruption.
As such, any organization that does not establish internal rules to regulate the exchange of gifts by employees and the offering of gifts to third parties, especially customers and business partners, runs a serious risk of facing a situation that may lead to financial or general damages.
When dealing with gifts, the two most prominent roles are management and assistant directors and procurement professionals. Management and assistant directors might even receive airline tickets, hotel stays in Brazil or abroad, entertainment programs, and the like as gifts, since they are the ones who suggest the booking of airline tickets and hotels, mainly for the executives to which they assist. Procurement professionals, on the other hand, are those who determine the supplier that will provide goods or services needed by the company. Depending on the internal rules and pre-established criteria, the autonomy for decision-making entrusted to such professionals gains a lot of relevance, thus becoming targets of malicious suppliers seeking to win clients at any cost, regardless if they must “buy” their decisions.
When the company fails to establish clear, transparent, and well-defined criteria, the subjectivity becomes a serious risk. This reminds me of the story of an executive who worked in an extremely corrupt business sector and which, after some time working in that manner, started to normalize corruption as part of his work routine.
But given the risks mentioned above, what could be done? To answer this, my suggestion is the adoption of measures suggested by the Transparency International and also by the French Anti-Corruption Agency (“AFA”, Agence Française Anticorruption) within the scope of the French Anti-Corruption Law – Sapin II.
Regarding Transparency International, the following criteria are suggested:
| CRITERION | DEFINITION |
| Bona fide | Made for the right reason: if a gift or hospitality, it should be given clearly as an act of appreciation, if travel expenses then for a bona fide business purpose. |
| No obligation | The activity will not create any obligation or expectation on the recipient. |
| No undue influence | The expenditure will not be seen as intended for, or capable of, achieving undue influence in relation to a business transaction or public policy engagement. |
| Made openly | It will not be performed in secret and be undocumented – if it is, then the purpose becomes questionable. |
| Legality | It is compliant with relevant laws. |
| Accords with stakeholder perception | The activity would not be viewed unfavorably by stakeholders were it made known to them. |
| Proportionate | The value and nature of the expenditure is not disproportionate to the occasion. |
| Conforms to the recipient’s rules | The gift, hospitality or reimbursement of expenses will meet the rules or code of conduct of the recipient’s organization. |
| Infrequent | The giving or receiving of gifts and hospitality is not overly frequent between the giver and the recipient. |
| Documented | The expense will be fully documented including purpose, approvals given and value. |
| Reviewed | The records of promotional expenses and the effectiveness of the policy and procedures are reviewed by management with a regular report to the board or a board committee. |
The AFA has published its Guide on Corporate Gifts & Invitations which provides some very important recommendations starting with the elaboration of a Policy that establishes well-defined criteria to regulate gifts and invitations. To this end, it provides the following recommendations:
| 1. Define and illustrate examples of gifts and invitations. |
| 2. Determine legitimate criteria for offering and receiving gifts. |
| 3. List the conditions under which gifts and invitations may be given or received. |
| 4. Define internal rules for approval and traceability. |
| 5. Organize the responsibilities and roles for each party. |
The AFA has also defined the following criteria:
| 1. are authorized by applicable law(s); |
| 2. are not requested by the recipient; |
| 3. do not seek to obtain undue compensation or advantage; |
| 4. are not intended to influence a decision and thus not carried out at a strategic moment (example: in biddings, when signing agreements, voting, granting authorizations, obtaining contracts, modifying legislation or regulations, etc.); |
| 5. the recipient must not exercise decision-making power over an anticipated or pending decision that affects the interests of the organization; |
| 6. are occasional with regard to professional activity; |
| 7. do not cause embarrassment if publicly disclosed; |
| 8. are carried out within a strictly professionally; |
| 9. are registered in the organization’s books and records (example: registration of offered and received gifts). |
Finally, another highlighted point in the aforementioned guide regards establishing four control levels to ensure that gifts do not become an instrument of conflict of interest or corruption:
| 1. Self-control | Carried out by employees themselves. |
| 2. First Level Control | Carried out by the superior. |
| 3. Second Level Control | Carried out by internal controls or by the compliance officer. |
| 4. Third Level Control | Carried out by internal audits. |
Therefore, there’s no excuse for not doing the right thing. All it takes is a commitment to ethical principles and the guidance of the company’s top management.