French anti-corruption agency AFA has now published a first draft of their guide on the subject of gifts and invitations. The guide is open for public consultation until the end of September and aims to help companies implement effective rules and procedures to avoid corrupt practices. With these guidelines AFA aims to help companies act in compliance with the anti-corruption law Sapin II which came into effect in January 2018.
- Agence française Anticorruption (AFA): Practical guide on gift policies and corporate invitations (PDF)
According to the guide it is essential for companies to have a clear policy on gifts and invitations. This does not have to be a stand-alone policy; it can also be part of the Code of Conduct which Sapin II requires companies to have anyway. AFA recommends making the policy public so that business partners understand the organization’s commitment to preventing corrupt practices. And, of course the most important thing is that the top management lives by the guidelines (“tone at the top”).
When creating this policy AFA recommends including concrete examples which are relevant to the company’s industry and its employees. These can be meals in a restaurant, invitations to cultural or sports events, payment of travel expenses, financial loans and many more. Situations like these should be illustrated in the policy using easy-to-understand examples (see also our whitepaper on creating good policies).
Acceptable Invitations and Gifts
Naturally the policy should also include criteria on deciding whether a gift or an invitation is a mere courtesy or an act of corruption. Gifts and invitations could be acceptable when:
- they are not solicited by the beneficiary
- they are not intended to obtain undue consideration or benefit
- they are not intended to influence a decision and are therefore not carried out at a strategic moment
- the beneficiary does not exercise a decision-making power concerning an advance or pending decision affecting the interests of the organization
- they are occasional with regard to the professional activity
- they do not cause a feeling of embarrassment if they are publicly revealed
- they are performed in a strictly professional context
- they are recorded in a company register of given and received gifts
Important according to AFA is also the frequency of gifts and entertainment. A gift may be small but if an employee receives weekly gifts from the same business partner it might be a problem. AFA mentions annual limits as a good practice, for example for teams, departments, branches or entities. Managing a register of all gifts would help keeping an eye on the frequency of gifts and invitations to better detect corrupt practices.
AFA Recommends Establishing a Gift Register
In general, there are three ways to manage the approval or refusal of gifts and invitations:
- Personal assessment: Individual decisions are made based on context and circumstances, without central guidance. AFA does not recommend this option because of the immense subjectivity and lack of uniformity in decision-making.
- Thresholds beyond which authorization is required: Companies set monetary threshold, for example by country. Below these thresholds’ gifts and invitations would normally be acceptable, above them they require approval by the local management or Compliance.
- Fixed limits which can’t be exceeded: While this option is very strict and transparent and does not require an individual approval process, it also does not allow for any exceptions at all. Also sometimes it can be difficult to properly estimate the monetary value of a gift or an invitation.
Option 2 provides the best combination of fixed limits and individual approval processes, but a dedicated software may be required to manage all the validation and approval processes to reduce the workload for everyone involved.
In general, AFA recommends establishing a gift register which contains every gift, invitation or other benefit given, received or refused. Managing a gift register helps companies to:
- guarantee traceability and ensure transparency
- demonstrate the effectiveness of the procedure
- track the behavior of certain third parties
- detect internal behaviors contrary to the rules of the organization
- illustrate the training provided to employees by concrete cases
- improve compliance risk mapping when it is updated accordingly
The gift register should ideally also document the approval processes. These processes can depend on the benefit’s context and the monetary value. For example, less expensive gifts can be approved by the local line manager; more expensive gifts have to be approved by the Compliance team as well. If a request is refused, the register should also document the reason for this refusal.
Further Best Practice Recommendations to Manage Gifts and Invitations
AFA refers to using software tools as a good practice for managing these approval processes. Dedicated tools allow the setting e.g. monetary thresholds per country, define approval workflows depending on country, monetary value and other factors, and guarantee documentation of all benefits given, received or refused, including recipients, context and more information.
Besides creating the policy and a software-supported gift register, another very important point is training employees and managers. Even the best process or tool will not eliminate corrupt practices if employees are not properly trained and aware of potentially difficult situations. To examine whether a gift or an invitation could be problematic, AFA recommends the “newspaper test”: Would it damage the company’s reputation if the gift or invitation would be published in the press? If the answer is yes, it’s probably not a good idea.
The AFA guide should help – not only French – companies to critically examine their current practice on gifts and invitations and sets reliable guidelines and best practices. Following the guide is an important step in making sure the company’s Compliance program meets the requirements of Sapin II. And, of course, it helps to safeguard company reputations and reduce compliance risks, something which always pays off.
Learn how to effectively create, implement and communicate Compliance policies and measure the success of your policy program – for everyone who is responsible for Compliance policies in their organization. Download our free guide to policy management.