Gifts, travel, lodging, and entertainment

• Author: Robert W. Tarun
• Pages: 127-144

CHAPTER 6

Gifts, Travel, Lodging, and

Entertainment

I. INTRODUCTION

Gifts, travel, lodging, and entertainment for non–U.S. government officials present

common or day-to-day Foreign Corrupt Practices Act issues for multinational com-

panies and their counsel. If a company has clear written policies and procedures for

such requests, most of the issues will resolve themselves without any substantial risk.

Thoughtful, customized written policies and internal controls can greatly reduce

the risk of FCPA anti-bribery, books-and-records, and internal controls violations;

establish sound guidance for managers; and deter many potential wrongdoers.

Some multinational companies (MNCs) prohibit all forms of gifts, hospital-

ity, or entertainment. Many rely largely on a two- or three-paragraph summary

of the FCPA or anti-corruption laws in their code of company conduct to guide

employees. Still others that operate in challenging countries provide specific writ-

ten FCPA guidance to employees utilizing a reasonableness and proportionality

standard—often tied to the magnitude of the gift, travel, or entertainment. Because

the FCPA has no de minimis exclusion for gifts, travel, lodging, or entertainment

expenditures, the analysis often reverts to the Act’s use of the word “corruptly” (see

Chapter 1 at I.C.4).1 Most well-managed multinational companies conduct some

form of annual FCPA or anti-corruption training—live, or at least online—that

addresses gifts, travel, lodging, and entertainment, among other topics. MNCs that

sponsor special sporting events like the Olympics or the World Cup prepare and

train their employees, temporary employees, and agents on the corruption, risks,

and scenarios they are likely to encounter. Adverse publicity from an arrest or an

investigation can completely defeat the goodwill intended by a major sponsorship.

For many gift, travel, lodging, and entertainment issues, it is often helpful to

consider the simple question: How would the host officer or employee feel about

being pictured with the donee or beneficiary in the local newspaper, and the gift,

travel, or entertainment and supporting invoice(s) were next featured in a front-

page story of The New York Times? In essence, one must ascertain whether under the

particular travel, lodging, and entertainment facts and circumstances, there is a

quid pro quo. Thoughtful, stand-alone written company travel and entertainment

policies with examples are more likely to provide a safe haven for a company and

its employees alike. In such policies, “reasonableness” (borrowing from the FCPA’s

travel and entertainment language relating to certain marketing and contracting

activities) or “reasonable and proportionate” (borrowing from the U.K. Bribery Act

127

128 CHAPTER 6

Guidance2) should be the governing standard and is best met and assured under

policies where prior written approval is required.

Because the FCPA expressly affords protection for certain types of travel and

lodging, but does not directly address gifts anywhere, the topics are next addressed

separately.3

II. GIFTS

Most business gifts are simply that: gifts designed to promote products or ser-

vices and thus business and business relationships. Under the FCPA, the term

“corruptly” connotes an evil motive or purpose, and only a gift with an intent to

wrongfully influence the recipient in awarding or retaining business or gaining an

improper business advantage should provide the basis for an FCPA bribery charge.

A gift or entertainment that is provided to create a favorable business climate with

only a generalized hope or expectation of ultimate benefit to the donor lacks the

benefit of a quid pro quo for the award of business.4

A. Nature, Value, and Transparency

In general, the nature, value, and transparency of a gift to a non–U.S. government

official will determine whether the gift is corruptly motivated. Some of the ques-

tions and factors that should be considered in determining whether a gift is proper

under the FCPA include:

1. The nature of the gift:

• Is the gift business-appropriate?

• Would a donor be at all embarrassed if the fact of the gift were to be pub-

licly disclosed?

• Is the gift something a donor would be comfortable accurately describing

on an expense voucher?

• Is the gift a memento of a business occasion, for example, a bowl with an

engraved corporate logo to commemorate a joint venture opening?

• Is the gift cash or one involving something not appropriate for a business,

for example, adult entertainment?

• Is the gift a one-time event to a recipient, or has the recipient received

repeated gifts over time?

• Does the recipient or a close friend or relative of the recipient have any

decision-making authority with respect to the donor’s business, bid,

award, or contract?

2. The value of the gift:

• Is the value of the gift excessive and likely to be interpreted as able to influ-

ence the recipient?

• Is the value of the gift consistent or at odds with the donor company’s

domestic gift policy?

• Is the value of the gift substantial when compared to the annual income of

the recipient or the annual per capita income of the country?