Welcome to Special Episode of Compliance Man Goes Global podcast of the Compliance Report-International Edition. We will be celebrating Christmas soon. In many countries, on December 31st people will be celebrating New Year as well. It is the right time to talk about compliance and gifts giving. We will explore this matter in a plain language so to say and in the simple game form. Moreover, to make the podcast handy and more appealing we attach respective illustration from the Compliance Man illustrated series, created by Timur Khasanov-Batirov.

For those of our listeners who are not aware about our format, in each podcast, we take two typical concepts or more accurately misconceptions from in-house compliance reality. We check out if these concepts work at emerging jurisdictions. For each podcast, we divide roles with Timur, a practitioner who focuses on embedding compliance programs at high-risk markets. One of us will advocate the concept identifying pros. The second compliance man will provide arguments finding cons and trying to convince audience that that we face a pure myth. As a result, we hopefully will be able to come up with some practical solutions for in-house compliance practitioners.

Tom: OK, Tim, let’s get started.

Myth #1

In our corporate policy, it prescribed that gifts giving is allowed. The main requirement is that gift has to be of modest value. Tim, would you think that this requirement is clear enough for implementing at high risk markets globally?

Tim Khasanov-Batirov: I think it is a vague and non-practical rule:  

Argument #1.

The cited statement from the corporate policy looks to be a legalized language. From practical prospective being located somewhere in Central Asia there is a challenge for local personnel to interpret this ambiguous “modest value” test.

Argument #2.

Even if there is, an extra statement in the corporate policy saying that value of the gift should not exceed rates prescribed by local laws this is still a very non-practical approach. It requires local staff in various locations to research and understand local legislations. This might become a challenge specifically in the cases if there is no local compliance officer, who is in position to provide advice.

Tom Fox:  I think, Tim that there are some cons here as well:

Argument #1

When we are talking about global corporations, which operate in dozens of countries it, is difficult to track rates of permitted values for gifts across the globe. Thus, the “modest value” approach serves as a basic principle. You can always use the common-sense test, if a gift seems to be too expensive, it is too expensive. As you note, what might be modest in Moscow, Oslo or New York may be of high value in a west African country.

Argument #2

I would agree with you that organization should tailor the language probably in the local corporate policies identifying rules applicable for each respective country. Moreover, in legislation on gifts giving to PEPs might significantly vary from country to country.

Tim Khasanov-Batirov: Tom, I agree with you. By the way, listeners, as you can see from the attached illustration Compliance Man and Ms. Corporate, congratulate us with the forthcoming holidays reminding us key compliance principles on gifts giving.


Tom: OK, Tim. We can formulate the next concept or maybe misconception in the following way:

Myth #2.

We are ethical. In our organization, everybody knows that we are not giving expensive gifts. No need to repeat this mantra for personnel prior to each holiday. Tim, will you agree with this concept?

Tim Khasanov-Batirov: I strongly disagree with this concept.

To get certain level of ethics in organization compliance officer has to be sure that everybody in the organization is aware about corporate rules on gifts and entertainment. Taking in consideration high staff’s turnover in certain industries there is a threat that in absence of systemic communication in a couple of years significant part of personnel will be unaware about compliance requirements. I would recommend reminding personnel on corporate gifts rules beforehand each major holiday of the respective country.

What are your views, Tom?

Tom Fox: I agree with you, Tim. In the same time, let’s look a bit closer on the way compliance practitioner should communicate rules on gifts among personnel.

There are different ways compliance practitioners communicate integrity rules among staff. This could be in person trainings, video clips, email messaging, etc. The main idea is that the way you disseminate the rules has to be effective. It has to be operationalized, as I like to say. For instance, there is no need to circulate emails if you know that recipients are in the field and could not read the messages. I would also recommend avoiding lengthy and vague language. You want to be precise and clear. A good movie clip from a Christmas film can work in this situation.

Finally, always remember to Document Document Document your communications around gift-giving if the regulators ever come knocking.

Tim Khasanov-Batirov: Agreed, Tom. As key takeaways from today discussion, I think we can mention the following:

  • The organization should have clear rules on gifts giving which should be tailored per each respective jurisdiction. Every compliance officer must to choose the most effective way to remind personnel before major local holidays on corporate gifts policies.

Tom Fox: Fair enough, Tim. It looks to be a practical tip. Tom Fox and Tim Khasanov-Batirov wish you a Merry Christmas and Happy New Year!

Join us for the next episode of Compliance Man Go Global episode of FCPA Compliance Report International Edition. Let’s bust more corporate compliance myths with us.