Anti-Corruption Tools

Gifts and Hospitality Policy

 

Gifts and hospitality may be corrupt, may be used to facilitate corruption, or may give the appearance of corruption.  Gifts may include cash or assets given as presents, and political or charitable donations.  Hospitality may include meals, hotels, flights, entertainment or sporting events.  To counter the risk of gifts and hospitality being corrupt, or being perceived to be corrupt, an organisation should either institute a total prohibition of gifts and hospitality, or should allow these only under strict controls.  The organisation should not allow a situation to occur where it has no controls in this regard.

 

1. Total Prohibition:  The organisation could expressly prohibit all officers and employees from offering, making, soliciting or receiving any gift or hospitality to or from any person or organisation who has had or could have any connection with the organisation’s business
2. Partial Prohibition:  Alternatively, the organisation could expressly prohibit all officers and employees from offering, making, or receiving any gift or hospitality in excess of a specified sum (which should be a relatively small amount) to or from any person or organisation who has had or could have any connection with the organisation’s business.  It is recommended, however, that there should always be a total prohibition on the soliciting of gifts and hospitality. [See further comments below for possible parameters.
3. Where a partial prohibition is adopted, the organisation should require all officers and employees to enter in a benefits register the details of any gift or hospitality given or received.  The benefits register should be inspected regularly by the organisation's management and by the auditors.  (See sample benefits register (pdf) (word))
4. The organisation should set out its gifts and hospitality policy in the organisation's anti-corruption code, which should be published on the organisation's web-site so that all employees and other persons and organisations are aware of the policy.  (See Anti-Corruption Code)
5. The organisation should ensure that all officers and employees are aware of the organisation’s gifts and hospitality policy.  (See Anti-Corruption Rules)
6. The organisation should ensure that all officers and employees understand the extent and impact of the gifts and hospitality policy.  (See Anti-Corruption Training).
7. The organisation should ensure that compliance with the gifts and hospitality policy is a condition of the officer’s or employee's employment contract.  (See Employment Terms - reference to Anti-Corruption Rules.)
8. The implementation of a gifts and hospitality policy will contribute to the establishment of an anti-corruption corporate culture which will itself promote ethical behaviour on the part of officers and employees.
   
   
   

Comments on possible parameters for a partial prohibition

A partial prohibition of gifts and hospitality is probably preferable to a total prohibition.  There is nothing intrinsically wrong with an organisation or individual giving or receiving gifts or hospitality, as long as these are not bribes, are not intended to be bribes, and cannot be perceived as bribes.  Entertaining and gifts are an important and enjoyable part of business and are essential in many cultures.  Charitable donations help the world.  Political donations are more questionable, as it is difficult to escape the perception that a political donation is being given in exchange for past or anticipated favours.

The organisation should select a threshold below which gifts and hospitality are acceptable.  This threshold will probably need to vary from country to country.  In rich countries, it would be highly unlikely that a gift worth US$50 would constitute, or be perceived to constitute, a bribe.  However, in very poor countries, a gift of this size could be equivalent to over a month’s salary, and therefore could easily be a bribe.  The organisation should, in its written procedure, permit gifts and hospitality which are under the selected threshold, but should require all permitted gifts and hospitality to be entered into a benefits register.  Although this can be seen as bureaucratic, it is a good discipline, as it focuses the employee’s mind when giving or receiving.  Firstly, he will know that the gift or hospitality will need to be entered into the register, and therefore will be more careful as to what he gives or receives.  Secondly, repeat small gifts of under the threshold could cumulatively become a bribe (for example, $50 given to an employee every day for 60 days).  Recording the gifts would enable management easily to identify any such cumulative gifts.  Failure by an employee to register a suspicious gift would give rise to a presumption that the employee is trying to conceal the gift, and should be a disciplinary offence. 

There may be specific cases where it may be desirable for the gift and hospitality policy to be waived.  For example, representatives of the organisation may be invited to an important event where the total costs of the day may exceed the threshold.  In this case, any waiver of the gifts policy should only be permitted with the consent of a senior executive (e.g. chief executive or finance director).  In waiving the restrictions, the executive should ensure that the circumstances could not constitute a bribe, or be perceived to constitute a bribe.  The circumstances should be recorded in the benefits register.  Where a senior executive with the power to waive the gifts policy will himself be the giver or beneficiary, he should ensure that another senior executive approves the waiver.

The amount which may be permissible to give for a charitable or political donation could be significantly higher than the amount allowed for a gift to an individual.  If this is the case, then at least two senior executives (e.g. chief executive and finance director) should approve the donation, and it should be recorded in the register.  Great care should be taken in approving charitable or political contributions to ensure as far as possible that a manager, trustee or beneficiary of the charity or politial party is not someone who could influence any business dealing, for example, a tender process.

Gifts or hospitality should never be given or accepted where they are illegal under applicable law, or could improperly affect, or might be perceived improperly to affect, the outcome of a business transaction.

A good guide for deciding acceptable value and timing for gifts and hospitality is to apply the “newspaper test”.  Would a newspaper be likely to report the gift or hospitality, and, if a newspaper did report, what would the public perception be?  For example, a bottle of whisky given at Christmas would be unlikely to be reported or to give rise to an adverse impression.  On the other hand, an all expenses paid overseas golfing week-end prior to a tender evaluation would almost certainly give rise to an adverse impression if reported.

Reasonable efforts:  Having a gifts and hospitality policy does not mean that it will be complied with, or that it will succeed in eliminating all corrupt gifts and hospitality.   However, if an organisation can demonstrate that it has used all reasonable efforts to design an effective gifts and hospitality policy, to ensure that its officers and employees are aware of it, and to monitor compliance with it, then this will improve the reputation of the organisation and will assist it in the event of any investigation relating to corruption.


Sample gifts and hospitality policy

Taking into account the above parameters, the following is suggested as a possible gifts and hospitality policy.

 

1. [Name of organisation] does not permit any officer or employee of [Name of organisation], directly or indirectly, and whether in his/her personal capacity or on behalf of [name of organisation]
   
   

   • to solicit any gift or hospitality in the course of his/her employment
   • to offer or give to, or receive from, any Connected Person any of the following:
     
     
     • a personal or corporate gift in excess of a value of […………….];
     • hospitality in excess of a value of […………….];
   • to offer or give a donation, in excess of a value of […………….], to any political, charitable, or not-for-profit organisation, where a trustee, manager or beneficiary of that organisation is a Connected Person, or is related to a Connected Person.
   • to offer, give, or receive any gift or hospitality which is in breach of the applicable law.  Consequently, the law must be checked before any gift or hospitality is offered, given or received.

   A “Connected Person” means any organisation or individual (other than an officer or employee of [name of organisation]) who has had, has, or may have any connection with or influence over the business of [name of organisation].

   
   [Note: The above value thresholds will vary in different countries and should be set so as to be too low to hide an illicit payment.  Different thresholds could be provided for personal and corporate gifts, for donations to different types of organisation, and for different types of hospitality.  However, the more these thresholds are broken down, the more complicated implementation of the gifts and hospitality policy will become.]

2. In exceptional circumstances, [name of organisation] may exercise its discretion so as to permit gifts or hospitality to exceed the thresholds specified in paragraph 1.  Such discretion is exercised by [specify a senior executive, e.g. chief executive or finance director].
   
   
3. All officers and employees of [name of organisation] are required to enter details into the Benefits Register of all gifts and hospitality made and received which are permitted under paragraphs 1 and 2.  The Benefits Register is inspected regularly by the management of [name of organisation] and by its auditors.  (See sample Benefits Register (pdf) (word))
   
   
4. In the interests of transparency, this gifts and hospitality policy is published on the website of [name of organisation].
   
   
5. In order to ensure that all officers and employees are bound by this gifts and hospitality policy and fully understand it:
   
   
   • Compliance with this gifts and hospitality policy is a condition of each officer’s and employee's employment contract. (See Employment Terms - reference to Anti-Corruption Rules.)
   • Compliance with this gifts and hospitality policy is required under rules issued to officers and employees. (See Anti-Corruption Rules)
   • Guidance as to how to comply with this gifts and hospitality policy forms part of the anti-corruption training provided to officers and employees by [name of organisation]. (See Anti-Corruption Training).
     
6. [Name of organisation] will use all reasonable efforts to ensure compliance with this gifts and hospitality policy.
7. If any person, whether or not an officer or employee of [name of organisation], is aware of any gift or hospitality which is or may be in breach of this gifts and hospitality policy, a report may be made to ……………………. [specify the name and contact details of the officer responsible for corporate governance]  This report may be made anonymously.”
   
   

Definitions

The organisation may wish to define the relevant terms, in which case the following definitions may be used.

• “Gift: a financial or other benefit, offered, given, solicited or received without any obligation to provide any benefit in return.

• Hospitality:  the offer or provision of any facility at a free or reduced rate which is designed to increase the comfort and pleasure of the person to whom the hospitality is being provided.  Some examples are free or reduced rate entertainment, meals, accommodation, travel, and car hire.
• Political donation:  usually a financial gift made to a political party or other political organisation. 
• Charitable donation:  usually a financial gift made to a charity, other public welfare organisation, or not-for-profit organisation.”

Other Resources

Some organisations have published information on gifts and hospitality. This information is listed below in alphabetical order according to the name of the organisation which has published it. Click on the title to access the information. If the following details are inaccurate or incomplete, or you wish details of a resource which is not listed below to be listed, please send details to GIACC. Only resources which are available free of charge will be listed.

International Chamber of Commerce has published:  “Combating Extortion and Bribery:  ICC Rules of Conduct and Recommendations”.  This provides as follows:

 

“Article 4: Political and Charitable Contributions and Sponsorships

 

a)           Enterprises should only make contributions to political parties, party officials and candidates in accordance with applicable laws, and all requirements for public disclosure should be fully complied with. The amount and timing of political contributions should be reviewed to ensure that they are not used as a subterfuge for bribery.

 

b)           Enterprises should take measures within their power to ensure that their charitable contributions and sponsorships are not used as a subterfuge for bribery. Charitable contributions and sponsorships should be transparent and in accordance with applicable law.

 

c)           Enterprises should establish reasonable controls and procedures to ensure that improper political and charitable contributions are not made. Special care should be exercised in reviewing contributions to organizations in which prominent political figures, or their relatives, friends and business associates are involved.

 

 

Article 5: Gifts, Hospitality and Expenses

 

Enterprises should establish procedures covering the offer or receipt of gifts, hospitality or expenses in order to ensure that such arrangements (a) are limited to reasonable and bona fide expenditures, and (b) do not improperly affect, or might be deemed to improperly affect, the outcome of a procurement or other business transaction. “

 

 

TI’s “Business Principles for Countering Bribery” contains the following recommendations:

 

“5.2        POLITICAL CONTRIBUTIONS

 

5.2.1       The enterprise and its employees or agents should not make direct or indirect contributions to political parties, organisations or individuals engaged in politics, as a way of obtaining advantage in business transactions.

 

5.2.2       The enterprise should publicly disclose all its political contributions.

 

5.3         CHARITABLE CONTRIBUTIONS AND SPONSORSHIPS

 

5.3.1       The enterprise should ensure that charitable contributions and sponsorships are not being used as a subterfuge for bribery.

 

5.3.2       The enterprise should publicly disclose all its charitable contributions or sponsorships.

 

 

5.5         GIFTS, HOSPITALITY AND EXPENSES

 

5.5.1       The enterprise should prohibit the offer or receipt of gifts, hospitality or expenses whenever such arrangements could affect the outcome of business transactions and are not reasonable and bona fide expenditures.”

 

TI’s Guidance Document to the Business Principles (pages 16-33) contains advice and commentary on these sections of the Business Principles.

 

UK Anti-Corruption Forum’s “Anti-Corruption Action Statement” provides as follows: 

“7.       Actions for companies working in the sector

          

Companies working in the sector can play a major role in eliminating corruption.  The Forum recommends that companies take the following steps.

a)        ………………..

b)        Companies should maintain an anti-corruption policy which:

i)         ………………..

ii)        specifies the organisation’s policy on political and charitable contributions, facilitation payments, gifts, hospitality and expenses;

iii)       ……………….”

 

World Economic Forum Partnering against Corruption Initiative (PACI) has published “Partnering against Corruption Principles for Countering Bribery”.  They provide as follows:

“4.2        Political contributions

 

4.2.1       The enterprise, its employees or intermediaries, should not make direct or indirect contributions to political parties, party officials, candidates or organisations or individuals engaged in politics, as a subterfuge for bribery.

 

4.2.2       All political contributions should be transparent and made only in accordance with applicable law.

 

4.2.3       The programme should include controls and procedures to ensure that improper political contributions are not made.

 

 

4.3         Charitable contributions and sponsorships

 

4.3.1       The enterprise should ensure that charitable contributions and sponsorships are not used as a subterfuge for bribery.

 

4.3.2       All charitable contributions and sponsorships should be transparent and made only in accordance with applicable law.

 

4.3.3       The programme should include controls and procedures to ensure that improper charitable contributions and sponsorships are not made.

 

4.5         Gifts, Hospitality and Expenses

 

4.5.1       The enterprise should prohibit the offer or receipt of gifts, hospitality and expenses whenever such arrangements could improperly affect, or might be perceived to improperly affect, the outcome of a procurement or other business transaction and are not reasonable and bona fide expenditures.

 

4.5.2       The Programme should include controls and procedures, including thresholds and reporting procedures, to ensure that the enterprise’s policies relating to gifts, hospitality and expenses are followed.”

 

 

Page updated on 5th September 2008.

© 2008 GIACC

Site Credits  

Disclaimer