After eight years, TRACE member companies continue to raise novel compliance challenges for discussion. Carolyn Lindsey of TRACE looked into best practices surrounding raffles recently, — how they can be used to give something of value to government officials and, more importantly, how that can be avoided.

“Giving gifts to government officials can be risky business if appropriate precautions aren’t taken. Most multinational companies agree that precautions should include checking restrictions under the law of the government official’s country, ensuring that the value of the gift is “reasonable” and eliminating even the appearance of a quid pro quo. Sometimes compliance officers receive requests for (or discover after the fact) “inadvertent gifts”. These generally take the form of raffles and giveaways at events sponsored by the company. They also arise during product launches, store openings and route launches in the case of airlines. The grand prize of two free plane tickets, a new high-end appliance or a Rolex watch is a nice treat at the end of a soiree, but if the high-ranking government official walks away with the grand prize it could leave the compliance staff with heartburn and everyone else in the room wondering whether the raffle was rigged. (Indeed, we’ve heard stories from Asia about raffles that always favored the highest ranking official present.)

How can companies mitigate the risk during these events? Below are a few suggestions for multinationals to consider:

 Check the guest list to determine how many government officials have been invited. If the majority of participants have some government role it may be best to skip the big-ticket item and give gift baskets with more moderately priced goodies.
 Review local law. If the country places restrictions or prohibitions on gifts to government officials, make sure that the prizes comply with those restrictions.
 Make sure that each person (or in some cases family) has only one chance to win.
 Determine the odds of winning. The greater the odds the less likely the appearance of a quid pro quo.
 Reconsider lavish prizes. While these are often the main attraction, carefully weigh the benefits and risks. Placing a reasonable dollar limit on raffle items can still result in a nice bonus for the winner without going over the top.

Of course, raffles arguably lack the necessary intent required to violate the FCPA and other anti-bribery laws. These are games of chance designed to entertain attendees at an event, not lavish gifts given to win business in violation of anti-bribery laws. However, if your company name is on the event, the photo of the mayor or the minister in the paper the next morning standing with his shiny new sports car can raise eyebrows in the local community. With some creative thinking and careful planning, the company can host an enjoyable evening and everyone can walk away a winner.”