David Browne writes that employers can be held responsible for the actions of their employees in relation to gifting. It is therefore important to understand where ethical boundaries are.
Recent controversy over the Prime Minister and his wife receiving clothes and concert tickets as gifts has reignited the debate about ethical and legal boundaries for handouts.
Words like “bribery” and “corruption” may conjure up images of multinational corporations lobbying government, but it affects businesses of all sizes and sectors.
Employers are responsible for the actions of their employees. They must have policies and procedures to prevent bribery. Otherwise, they could face serious financial, reputational, and criminal consequences.
Bribery Act 2010,
The Bribery Law 2010 criminalizes four offences, including the act or being bribed by someone else, the bribery of foreign public officials, and failure to prevent corruption of associated persons.
Businesses could be held liable if they do not have adequate safeguards to prevent bribery. This offence can result in a fine of unlimited amounts.
Even though the Act clearly defines what constitutes corruption, it’s still very easy to get caught up in the law.
It can be confusing to trade in countries where “facilitation” payments are the norm.
To ensure transparency, employers must always be aware of what their employees are doing. They must also ensure that all financial transactions are recorded in a way that is accurate, complete and current.
Persons associated with the Associated Persons
The Act holds businesses liable not only for employees who bribe other people, but also includes any ‘associated person’.
It can be a consultant, contractor, freelancer, or agent.
Employers should therefore be careful when choosing external partners, such as conducting background checks and reviewing documents, or asking for references, if appropriate.
But just because a worker is convicted of bribery does not mean their employer will be charged.
Businesses that have policies and procedures in place designed to deter and prevent bribery or corruption may be cleared in court, or even avoid prosecution.
Understanding and training
It is not enough to have a policy on the shelf collecting dust. The policy must be fully understood by the employees.
It may be necessary to provide regular training using relevant examples of how bribery or corruption might look, depending on the industry and job role.
Employees must also understand the potential consequences of failing to follow this policy. These include being fired from the company or facing a criminal conviction, a fine, and even prison time.
The sessions, as well as those present, will need to be recorded properly in order to provide a crucial part of the defense in a corruption investigation.
It is important to demonstrate a company’s commitment to anticorruption by implementing a zero-tolerance bribery policy that is applied consistently to all employees.
The senior leadership should be a positive role model by setting a culture that is transparent. This will filter down to junior employees, and eventually permeate company culture.
What about corporate hospitality
When it comes to corporate catering, businesses should also think about their approach. The government recognized that corporate hospitality was a key tool to building and maintaining relationships between clients, customers, and stakeholders.
The Bribery Act defines bribery as a method of ‘inducing’ or ‘inducing’ ‘improper performances’. In other words, it is a way to influence or motivate someone’s behaviour or decision.
When a company decides to make a gift to a customer, it’s important to explain the purpose of the gift from the beginning to avoid any misunderstandings.
Even if the reason is obvious, timing and optics should be considered. It may be standard to send clients a birthday gift.
Even if the gift’s value is lower, a business that operates in an unusual sector is likely to be investigated.
If the company is currently in the middle a process of tendering with a client, this could be misinterpreted – regardless of the intention or previous expectation.
Businesses should also be aware of the potential perceptions that a gift may have.
Industry standards
Corporate hospitality norms are considered, even though bribes can be seen as extravagant or expensive. This is to make sure that companies in industries where gift-giving occurs more often, such as hospitality, leisure, or entertainment, don’t get unfairly scrutinised.
Even if a gift’s value is lower, a business that gives gifts less frequently is likely to be investigated than one which gives them more often.
The timing of the gift or its optics are more likely to raise red flags than a business being generous with their customers, clients, or stakeholders.
Businesses that engage in corporate hospitality or gift-giving on any scale, should be vigilant and exercise caution.
Most business owners may find it hard to believe that bribery or corruption can occur, but they do.
It is clear that businesses cannot use the defence of adequate procedures by retroactively implementing policies as legal protection after an employee has been found guilty.
Anti-corruption culture and proactive prevention are the only effective defenses. Having clear policies in place now can save your business from future financial and reputational harm.
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