When Gifts in Business are Tools of Corruption

In many cultures, we celebrate giving gifts during the holiday season. In the business world, however, sometimes gift-giving is a year-round occurrence … and it can take the form of corruption.

World Bank’s Enterprise Surveys provide detailed statistics on where this type of corruption, which encompasses bribes and “illegal gratuities,” is most rampant. BusinessTech, a South African based-site for business and technology news, recently provided an analysis of World Bank’s findings and distilled the results in “The biggest corruption problems in the world – and where they happen most.”

Among its conclusions, BusinessTech found that “the most corrupt region in the world is South Asia, which includes countries such as India, Pakistan, Afghanistan, Bangladesh and Sri Lanka.” Not too far behind is Africa: “The data shows that the Sub-Saharan Africa region is far above the global average when it comes to incidences of corruption experienced by global enterprises.”

It is unfortunate when more than a quarter of firms surveyed in those regions expect to give gifts to public officials in order to “get things done,” a matter-of-fact way of “greasing the wheels,” as one might say. As the article states:

According to the survey findings, the most prominent form of corruption around the world involves giving gifts to governments to secure contracts. 27.1% of enterprises, globally, have indicated having been expected to do this.

In U.S. law, an illegal gratuity is defined as the following:

Illegal gratuity is something of value that a person gives offers or promises for the purpose of influencing the action of an official in the discharge of his or her public or legal duties. For example, it is an offence to improperly influence judges or other judicial officers, members and officers of public bodies, or voters at public elections.

There are plenty of case studies in which contractors, government officials, or even business executives have been on one side or the other of bribery or illegal gratuities. TheCGP.org provides two cautionary tales on their website:

On April 25, 2013, the U.S. Department of Justice issued a press release announcing that a Bureau of Prisons (BOP) employee had pled guilty to a charge of receiving unlawful gratuities.  The BOP employee, a supervisory traffic management specialist in the BOP Relocation Services section, was responsible for giving relocating BOP employees a list of approved movers and then referring their move to agents of the chosen carrier.  While performing these duties the employee received spa and salon gift cards in the amount of $1,007 and $790 from one carrier’s agent, as well as free moving services from moving companies.  The BOP employee was subsequently assessed a fine of $1,500 and placed on probation for 18 months.

And:

On June 5, 2013, the Washington Post reported that the Internal Revenue Service (IRS) had placed two managers on administrative leave for accepting free food and other gifts in violation of government ethics rules.  These violations were discovered during an audit of a years-old conference, at which the managers “allegedly held an after-hours party in their private hotel suites.”  It apparently was not clear who gave the managers the food, worth $1,162.  Acting Commissioner Danny Werfel said in a statement to the Post that the IRS has started the process of firing the managers.

Gift-giving – to loved ones, friends, and even colleagues – can be a fulfilling and wonderful endeavor. In business, however, it can sometimes take the form of corruption. Businesses should be quick to adopt a no-tolerance policy for bribery and illegal gratuities, and make sure it is communicated across the entire organization.