Gift policies in business are usually the types of policies we see once a year that remind us to not give excessive, unreasonable gifts, and not accept excessive unreasonable gifts, in the event that either the giving or the receiving is construed as bribery.
Ever wondered why gift policies feel like a cautionary tale straight from the headlines of a national newspaper? Organisations strive so hard to protect their reputation, which is instantly destroyed with a hint of an allegation of corruption or bribery.
Gift Policies are an essential component of any organisation’s governance to prevent corruption, bribery and conflict of interest. Lavish gifts or entertainment once known to the public often damage the reputation of the giver and the receiver by demonstrating a special relationship that either no other customers or suppliers have access to, thereby making the business playing field unfair. Whilst we may think of corruption and bribery as older business practices, a scan of the news reveals that there have been numerous bribery cases in the last few years, which you can read about below.
Gift Policy
A Gift Policy is essentially the rule book in an organisation that defines what is acceptable and not acceptable when it comes to gifts. The policy should provide a definition of what a gift is and what the acceptable limits are. Often gifts, hospitality or entertainment in this context includes but not limited to money, vouchers, goods, services, meals, entertainment tickets, events, etc. Organisations should define a monetary limit and describe what a reasonable gift is. The word lavish is used to describe luxury gifts that we all know would cost some serious $$$. Marketing freebie are promotional items and do not constitute gifts.
Some organisations may choose to set country specific rules concerning gifts, where gift giving and receiving are part of local culture and customs(such as in the Middle East, UAE, Asia, Africa). The policy should then define the rules around accepting gifts (e.g. set limits on the value of gifts that can be accepted) and offering gifts. If you work with the public sector and or government agencies, you will want to pay very close attention to this, as government officials are subject to strict restrictions. Gift Policies are often public documents so that an organisations customers or suppliers understand the rules of doing business with that organisation.
Why is the simple act of giving a thoughtful gift fraught with risk for both the giver and the receiver?
Why is giving a gift risky?
You may be thinking of giving a gift to someone you know, maybe its their birthday, or you worked with them on something, and you would like to thank them. The intent of the gift is where the water gets muddy. As a giver, giving lavish gifts or entertainment with the intent to endear yourself to the receiver or influence them, or gain their favour, is setting you up for allegations of bribery and corruption. As a giver, if word was to get out that you have showered gifts on some customers or suppliers and not others, you and your business reputation will be affected. Maybe some will think you offer gifts and would strive to partner with you, can your business afford gifts for all? Others will see through your selection process when your “friends” are sporting your lavish gift and will start to question your integrity and authenticity.
Why is receiving a gift risky?
The reverse is true for the receiver. The litmus test is how would you feel if the fact that you were given a lavish gift was publicised in the news and media? Would you want it known? If not, its likely that receiving that lovely gift has made things slightly awkward. You may feel obliged to support the gift giver whether that’s through keeping them informed or giving them a like on social media, where you don’t consistently support others. The reality is that all of these things will be seen in public, and it will become evident that some customers or suppliers have your favour while others don’t.
Real-life cases
Unfortunately, gifts are the gift that keep giving, and while it is difficult to find cases or stories that are exclusively about gifts, here are a few that may shed further light on the topic.
- SAP to pay $220m over bribery charges – Software firm SAP used gifts and money to win business. It appears lack of adherence to anti-corruption and bribery policies may have contributed to this gift-giving disaster.
- Financial crimes in the UAE – A group of people were sentenced for several charges including soliciting and accepting gifts in exchange for exerting purported influence.
- Bribery in the NHS – Amongst various corruption, fraud charges, a telecoms manager in the NHS was given hotel stays, concert tickets, a laptop and software.
In conclusion, although many of us as individuals may love to give and or receive gifts, in the context of being an employee or business owner, it is better to tread with caution when it comes to gifts than risk ruining your reputation or finding yourself on the wrong end of a corruption charge. Strengthen your governance, risk compliance (GRC) practice, and by ensuring ethical business practice, you are also enhancing your ESG (Environmental Social Governance) practice.