8. Gifts, Hospitality and Expenses
Best Practice Guidelines
Set a Clear Policy
The company policy includes clear definitions of gifts, hospitality and expenses.
The company has a clear written policy that such promotional expenses should be reasonable, proportionate and bona fide. It prohibits any giving or receipt of gifts, hospitality or other expenses that could influence, or be perceived to be capable of influencing, a business decision.
The policy requires should cover public officials, governmental departments, public bodies and the private sector.
Create Procedures
Procedures should be designed and implemented on the basis of a risk assessment of whether promotional expenses are being used as a subterfuge or preparation for bribery.
Guidelines should state when hospitality is appropriate to be given or received and provide financial limits. It is obligatory that a host be present, otherwise it will count as a gift.
The company should place an upper limit for the values of gifts, entertainment or expenses that can be received or given, such values being nominal and appropriate to general business practice. The financial limits are proportionate in value to the markets in which the gift or hospitality is being offered or taken. A matrix of values for gifts, hospitality and expenses will help in tailoring the programme to cultures, varying economic differences, and country and/or sector corruption risk.
There is clear guidance regarding the cumulative impact of promotional expenses especially since they might breach the overall limits.
Checks and due diligence are applied as necessary to ensure that there are no circumstances that could raise concerns when planning to make promotional expenses. This includes checking local laws and regulations as well as policies of the recipient’s organisation or government department
A procedure should be designed to deal with cases where gifts cannot be declined or have been received and cannot be returned. Ways can include auctioning the gifts in aid of charity or displaying them in offices. Another option, requiring sensitivity, is to return a gift with a note explaining the policy not to accept gifts.
The guidance provides advice on how gift giving and hospitality should be handled with particular respect to local customs and culture. The guidance can be flexible in recognising and accommodating local customs and cultural differences for gifts and hospitality but should set out clearly policy, processes and reporting guidance.
Close attention is given to promotional expenses given to public officials. This includes requiring prior approval for expenditures that present concerns or uncertainties, expenditures involving public officials and employees of state-owned enterprises.
Communicate and Train
The company should communicates its policy, procedures and guidance for gifts, hospitality and expenses to employees, business partners and suppliers to prevent misunderstanding or differences in perceptions of what is permissible within the policy.
Employees receive communications and training which include training on gifts, hospitality and expenses and ideally role playing exercises. Tailored training is given to functions most at risk such marketing, purchasing and corporate affairs.
Put in Place Controls
Gifts and entertainment given to public officials should be restricted and any to be made, should require pre-authorisation and review. If there is a current bid or business discussion involving the public official or his/her department, promotional expenses should not be used at all.
All promotional expenses given and received over a nominal value should be documented by employees including recipient, giver, value, nature of the transaction and business reason for the activity. Receipts for gifts must be retained on file to prevent them being given to officials with the gift which can then be returned to the retailer for cash. Any violations of policy must be reported to management and documented.
Employees who receive gifts or hospitality should inform management in writing when the value is above the permitted level.
There should be accurate recording of promotional expenses given using designated accounting codes.
Use of gift cards or cash gifts should be prohibited. Petty cash should be tightly controlled, expenses restricted and claims scrutinised. This prevents cash being diverted by marketing, intermediaries or other employees to fund bribes in the form of promotional expenses.
Reviews are carried out regularly of registers to check that they are being maintained, up-to-date and record the required information.
Line management are responsible for monitoring expense claims thoroughly and questioning claims which appear problematic.
Close scrutiny is given by internal audit to promotional expenses including looking for evidence of hiding or miscoding expenditures. Examination will be made of the transactions of third parties acting on behalf of the company. Spot checks can help in this respect. The audit process should be fully documented in case of an investigation.
Management regularly reviews promotional expenses given and received, and makes reports to the board periodically.
Give special consideration to local customs
Understanding is developed and appropriate respect applied for the subtleties of local customs related to gifts and hospitality.
Tailored approaches are designed and implemented to ensure gifts and hospitality conform to local customs but meet the anti-bribery policy – gifts can be modest yet convey respect.
Due diligence is carried out on intermediaries to check their record on gift giving, hospitality and integrity approach.
Local communications and training are given in local languages to emphasise the company’s commitment to its anti-bribery policy.
The legal, regulatory and anti-corruption environment should be monitored as this is likely to be fast-changing and the company needs to make sure it does not breach any new laws or government strategies. Arrange spot-check visits.
