Today we celebrate Charles Dickens’ work A Christmas Carol,which was published in 1843. This story has become well known and omnipresent in the Christmas season; in film, theater, radio, television, cartoon, opera and about every other form of media known to mankind.A Christmas Carol tells the story of a bitter old miser, Ebenezer Scrooge, and his transformation into a gentler, kindlier man after visitations by the ghost of his former business partner Jacob Marley and the Ghosts of Christmases Past, Present and Yet to Come.
The book was written at a time when the English were examining and exploring Christmas traditions from the past as well as new customs such as Christmas cards and Christmas trees. Dickens’ source materials for the tale appear to be many and varied but are principally the humiliating experiences of his childhood, his sympathy for the poor and various Christmas stories and fairy tales. A Christmas Carolhas been credited as one of the greatest influences in rejuvenating Christmas traditions of England. Scrooge himself is the embodiment of winter, and just as winter is followed by spring and the renewal of life, Scrooge’s cold, pinched heart is restored to the innocent goodwill he had known in his childhood and youth. It is a hardy tale that should be retold and remembered each holiday season as one of the true spirits for celebration.
A Christmas Carolis a good way to introduce the ever-present and always relevant topic of gift-giving and business entertainment during the holiday season. Today, I want to review the current guidelines of a best practices compliance program in these areas.
Gifts to Governmental Officials
Based upon the language of the Foreign Corrupt Practices Act (FCPA), 2012 FCPA Guidance, FCPA enforcement actions and relevant Opinion Releases, and allowing for inflation over the past 40 years, it would appear reasonable that a company can provide gifts up to a value of $500. Below are the guidelines which the Opinion Releases would suggest incorporating into a compliance policy regarding gifts:
- The gift should be provided as a token of esteem, courtesy or in return for hospitality.
- The gift should be of nominal value but in no case greater than $500.
- No gifts in cash.
- The gift shall be permitted under both local law and the guidelines of the employer/governmental agency.
- The gift should be a value which is customary for country involved and appropriate for the occasion.
- The gift should be for official use rather than personal use.
- The gift should showcase the company’s products or contain the company logo.
- The gift should be presented openly with complete transparency.
- The expense for the gift should be correctly recorded on the company’s books and records.
Business Entertainment of Governmental Officials
Based upon FCPA language, there is no threshold that a Company can establish a value for business entertainment. However, I believe there are clear guidelines which should be incorporated into your business expenditure policy, which should include the following:
- A reasonable balance must exist for bona fide business entertainment during an official business trip.
- All business entertainment expenses must be reasonable.
- The business entertainment expenses must be permitted under (1) local law and (2) customer guidelines.
- The business entertainment expense must be commensurate with local custom and practice.
- The business entertainment expense must avoid the appearance of impropriety.
- The business entertainment expense must be supported by appropriate documentation and properly recorded on the company’s book and records.
The incorporation of these concepts into a compliance policy is a good first step towards preventing potential violations from arising, but it must be emphasized that they are only a first step. There must be procedures to implement these policies. At a minimum, you must require a business justification from the business representative requesting to provide the gift or business entertainment. Next it should be reviewed and approved by a front-line compliance professional. Then, depending on the amount and nature of the request, it may need compliance function approval. Finally, if there is a Compliance Oversight Committee it should go to that Committee for a final check to make sure everything is in order.
These guidelines must be coupled with active training of all personnel, not only on a company’s compliance policy, but also on the corporate and individual consequences that may arise if the FCPA is violated regarding gifts and business entertainment. Lastly, it is imperative that all such gifts and business entertainment be properly recorded, as required by the books and records component of the FCPA.
The Christmas and Holiday season is always a good time to consider your gift and business entertainment policy. It is equally important to remember there are several such gift giving seasons around the globe and you need to train and communicate with your employees on your policy.
Finally, as always, do not forget the gut check test. If it does not feel right, it probably is not right.
This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at firstname.lastname@example.org.
© Thomas R. Fox, 2018