Companies should identify and, where appropriate, manage risk associated with gifts and entertainment by incorporating a clear policy into their overall corporate compliance strategy.
On September 11, 2020, the French Anti-Corruption Agency ("FAA") published its Practical Guide to corporate gifts and entertainment policies. The guide provides recommendations to assist companies in developing and implementing an effective gifts and entertainment policy ("Policy").
The Gifts and Entertainment Policy, a Tool for Mitigating the Risk of Corruption
The majority of gifts and entertainment are ordinary and entirely lawful, particularly when they are of modest value and are offered or accepted as a courtesy or as a token of esteem or gratitude. However, the provision or acceptance of a gift or entertainment may, in some cases, constitute an act of corruption, in particular when it has the purpose of determining the performance or nonperformance of an act by a person, in breach of his/her legal, contractual, or professional obligations.
It is therefore recommended that companies identify and, where appropriate, manage risk associated with gifts and entertainment by adopting a clear Policy, in accordance with their corruption risk maps and as part of their overall corporate compliance programs.
Elaboration, Dissemination, and Monitoring of the Policy
In its recently issued guidance, the FAA recommends the following:
- Determine the persons to whom the Policy applies (corporate officers, employees, occasional collaborators, third parties).
- Define the substantive rules of the Policy by taking into consideration:
- The purpose of the gift or entertainment. For example, gifts or entertainment offered prior to a decision on the award or renewal of a contract, particularly in the context of a call for tenders, present a heightened corruption risk;
- The value of the gift or entertainment by setting a threshold beyond which it must be refused or by defining its value by an appropriate adjective ("symbolic," "reasonable," etc.). The rules may vary according to the local context and customs; and
- The frequency of the gift or entertainment by limiting, for example, the number of gifts and entertainment that can be received/offered during a specified period.
- Define the procedural rules of the Policy (simple declaration to the manager, formal request for authorization, etc.).
- Communicate, by various means, the Policy (publication on the intranet website, distribution by email, posting in common areas, etc.).
- Establish, where appropriate, a three-fold control: hierarchical control of requests for authorization of gifts and entertainment, accounting control of the related entries, and internal control (audit) of the application and effectiveness of the Policy.
Examples of Good Practices
The FAA has identified the following steps to mitigate the risk of improper conduct in connection with the provision or receipt of gifts or entertainment:
- Mutualize certain gifts received (i.e., the Policy may provide that certain gifts may be either donated to charitable works or shared between employees).
- Set up a corporate register in which the information relating to gifts and entertainment is recorded.
- Elaborate the Policy in connection with the company's code of conduct.