Mitigating holiday cheer: what’s new in gifts and entertainment compliance

It is that time of year again, and so we look once more at what’s new under the C&E officer’s tree to help with the timeless challenge of gifts and entertainment (G&E)  compliance.

First, in what seems like just yesterday (because  it was just yesterday), “[a]n employee of Deutsche Bank‘s Japanese brokerage unit was arrested on … suspicion of showering a local pension fund manager with expensive meals, golf outings and trips overseas in return for some 1 billion yen in investments,”  as reported by the NY Times,   The piece continues: “The wining and dining of corporate pension fund executives had, in fact, become commonplace at Deutsche Securities, which set up shop in Tokyo in 2005, [t]he Nikkei business daily said. In some cases, the feasting got so out of hand that employees filed the mounting expenses over many days in a bid not to attract attention, the paper said. The [Securities and Exchange Surveillance Commission] advised that the government reprimand Tokyo-based Deutsche Securities over its conduct.”

This story is still developing, but it seems like a huge black eye for the bank.  However, presumably the lessons of how one of the world’s largest financial institutions could allow this type of very damaging conduct to occur will be a gift to others seeking to stay out of trouble.  (Among other things, this case could show why high-risk organizations need to do more  G&E monitoring, but that’s just a guess.)

Indeed, one of the most useful things that C&E officers can do regarding G&E is to keep track of others’ missteps in this treacherous area – and use that information in training and periodic communications to employees.   A helpful stocking stuffer in that regard is   this chart recently prepared by K&L Gates partners Amy Sommers and Matt Morley showing FCPA enforcement actions involving gift-giving in China, which I found via one of Tom Fox’s many excellent writings on anti-corruption compliance.

Another G&E  goody  to consider getting for that hard-to-please C&E officer on your shopping list is this recently published article “Honing a compliant gifts policy: the trends we are seeing today,” by Laura Flippin of DLA Piper. Among these trends:  “setting global limits on the amount that may be spent on any single meal, with three tiers covering low, medium and high cost markets. …Limiting gift giving, globally, to no more than $50 worth of low-value items which may be given at any one time to a single individual, with a cap of no more than four gifts annually…Requiring all gifts to be sourced centrally by procurement and prohibiting the use of vouchers or gift cards that can be easily converted to cash….Mandating prior written approval from a regional or above-country compliance officer if an employee wants to provide more than two gifts yearly to any single recipient (whether or not a government official) …Using a specific, documented process to address hospitality provided for high-profile, unique events in countries where the company has a large presence or business interests – for instance, the London Olympics.”

Of course, global companies increasingly need to keep track of the increasing number of “local” G&E laws and regulations, e.g., those of Nigeria – presented here by ethixBase  (the publisher of the COI Blog).  EthixBase has compiled  domestic gift giving rules from more than 80 countries – something that should bring joy to even the most Scrooge-like C&E officer of a global company.

Finally, some recent possibly relevant articles from our own back pages:

–          Gifts, entertainment and “soft core” corruption.

–          Complying with customers’ COI requirements.

–          COIs and industry culture.

Ho, ho, ho…

 

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