Carolyn Lindsey with TRACE has been leading a benchmarking project on commercial (private) bribery and provides this update:
“Anti-bribery compliance programs, including gifts and hospitality policies, have typically focused on conduct when interacting with government officials. However, recently companies are becoming increasingly aware of the risks associated with bribing private sector customers. Indeed, several recent enforcement actions in the United States have included charges of commercial (private) bribery and a number of countries and international conventions criminalize this conduct.
To determine how companies are handling this issue, TRACE recently conducted a benchmarking survey. Out of a total of 78 respondents, the majority, 90.2 percent, indicated that their anti-bribery compliance policies cover bribery of both private sector and public sector customers. However, companies take varying approaches to providing gifts and hospitality to private sector customers. 52.8 percent of respondents indicated that they have the same gifts and hospitality policy for both the private sector, while 47.2 percent responded that their policies have different standards for private sector customers.
Gifts and hospitality has always been a gray area of anti-bribery compliance and, based on the results of the recent TRACE survey, this is especially true when it comes to dealing with private sector customers. The survey results, and anecdotal information that TRACE has received from companies, led us to wonder what best practices should be when it comes to providing gifts, hospitality and entertainment to private sector customers. To answer this question, TRACE launched a follow-up working group to create guidelines in this area, specifically posing the question whether a company’s gifts and entertainment policy needs to be as restrictive for private sector customers as it does for public sector customers.
Those involved in the working group expressed a strong preference for creating a standard, uniform gifts and hospitality policy for all customers and vendors, regardless of whether they have any ties to the government. This was driven in part by the difficulty in determining who actually is a government official in some countries and the ease of administering a single, uniform policy. The proposed TRACE guidelines for providing gifts and hospitality to private sector customers are as follows:
• Companies should consider enacting the same gifts and hospitality policy for both private sector customers and government customers.
• Companies should consider implementing similar approval processes and/or reporting for all gifts and hospitality requests. Approval processes will vary depending on the size and structure of the company and can include dollar thresholds.
• All gifts and hospitality must be reasonable and customary.
• All hospitality and travel must be provided in connection with a bona fide and legitimate business purpose.
• Companies should comply with local laws and regulations when providing gifts and hospitality to private sector customers.
So, does this mean that the days of client entertainment purely for relationship building are coming to an end? Certainly, few companies would allow their employees to take a procurement official out for a game of golf simply to create goodwill. A number of companies have said that regardless of their official policies, their corporate practice of giving gifts and providing hospitality to private sector customers has changed over the past five years to become more restrictive.
TRACE welcomes thoughts from the compliance community as to what best practices in this area should be. Should companies have a single standard for both the private and public sectors, or can companies engage in a different type of relationship building with their private sector customers?”