Corporate Gifting vs Bribing: Why does your organisation need a Gifting Policy in the Code of Conduct?

*Jay Tripathi, a sales manager of a well-known company, invited *Arjun Singhania, a potential client, to a lavish vacation at an exotic location to sign a sales deal on the last day of the vacation.

Should Arjun Singhania accept such an invitation as a corporate gift?

Does this invitation violate the Code of Conduct of a company?

Read on to find out what Arjun did and why.

Corporate Gifting

Corporate gifting is a way to create touchpoints with clients, employees, and prospects through gifts, invitations, and favours. These customs are prevalent in social, political, and business life to enhance relationships and foster goodwill. But luxurious gifts may create an undue influence and obligation on the recipient and give rise to instances of professional misconduct.

How can an organisation remain safe from the unhealthy practice of creating an undue influence on the recipient, also known as bribing? Read on to find the answer.

What is a gifting policy?

A gifting policy defines the permissible extent to which it is acceptable to give or take gifts, their value, as well as the type of gifts, along with the circumstances under which such gifts can be exchanged, as drafted by an organisation in its Code of Conduct and Anti-Bribery and Anti-Corruption guidelines.

Gifting regulations in the Code of Conduct of companies are often based on the assumption that large or costly gifts potentially influence behaviour and create conflicts of interest, but small gifts of a nominal value do not. Many organisations have even defined a gift’s “nominal value”. For example, Titan’s gifting policy has defined nominal value as any gift that does not exceed INR 2,000 in monetary value. [1]

Psychology behind gifting

Receiving gifts creates a positive association with the giver and facilitates business connections. Gifting is a great way to motivate, appreciate and show value for the business done together. Corporate gifts such as caps, notebooks, T-shirts, cups, and novelty items give the highest return on investment (ROI) through improved productivity. [2]

While a gift is a gesture of goodwill, overtly generous and expensive gifts create an obligation on the recipient to extend more than their goodwill to the giver. A bribe is given with the intent to create undue influence to grant certain favours to the giver.

A bribe can easily be disguised as a gift and be given in the name of “building connections”.

Identifying bribes disguised as gifts

A gift is something of value given without any expectations in return. It is purely given to make the recipient feel valued, appreciated, and to build goodwill and trust. But a bribe is a gift given to create benefit and undue influence.

Therefore, gifts and bribes differ in the giver’s intent. A gift given with the intent to buy favour and benefit is considered to be a bribe.

It is common to accept invitations to a meal or social event when the purpose of it is strictly professional and is in the company’s interest. However, it is important to note that anything unprofessional or not in the company’s best interest is a move to create undue influence and should be politely declined.

Is gift-giving ethical?

A thank you note with a box of cookies to a client is purely done to appreciate the business done with them. Nothing is expected in return for such a gift. Hence, gifting becomes ethical since it is done without any expectations from the recipient.

However, a bribe is unethical and given with the expectation of some benefit. For instance, bribing a public servant to gain special preference in obtaining or retaining business is unethical and should not be given.

A gifting policy, among other measures, curbs unfair workplace practices. It promotes a healthy work environment free of bribes and corruption.

Gifting policy and law in India

A gift given as a token of gratitude well within the boundaries set by a gifting policy does not violate any laws. There is no specific legislation to restrain corporate gifting in India. Under the Prevention of Corruption (Amendment) Act, 2018, which applies to gifts given to, or exchanged with Public Servants, the determining difference between a gift and a bribe is whether the gift is given with an expectation of quid pro quo. Taking and giving gifts disguised as bribes instigate punishment as per the PC (Amendment) Act, 2018, and a host of other regulatory Acts that can lead to fines, imprisonment, or both.

Corporate gifting in India is growing at over 200% per annum. It is estimated that by 2025, the gifting market will generate around USD 159 million in revenue. [3]

How can your organisation deal with bribes disguised as gifts?

Each organisation making its gifting policy (as opposed to using a hand-me-down from yesteryears) is an effective way to start. Strictly adhering to this measure and the others mentioned below can safeguard the organisation’s reputation in the market and criminal prosecution of the company and its representatives.

Well-crafted gifting policies clearly state the consequences of violating the gifting policy and the professional Code of Conduct. Some gifting policies of organisations like Maruti Suzuki have a template response prepared for the employees, to politely refuse gifts that violate their policies. [4] Such practices help in building healthy working atmospheres and foster an ethical workspace.

What can employees do?

Employees should keep in mind the following while giving and accepting a gift:

Have a thorough understanding of the gifting policy of the organisation.
Disclose the offers and acceptance of gifts and hospitality to your supervisor or record it in the company’s register.
If in doubt or suspicion of the giver’s intent, always contact your line manager or your supervisor for guidance.
For further assistance, always contact your organisation’s helpline or any equivalent means of communication.

Bribery disguised as a gift maligns an organisation’s credibility and brand name in the market. An organisation should effectively communicate and train its employees on the organisation’s gifting policy and the Code of Conduct.

Rainmaker’s war on corruption

Recalling the Code of Conduct training Arjun Singhania underwent from Rainmaker, he could see through Jay Tripathi’s intentions to influence him to sign the deal in the name of a “vacation”. During his training, he had learned that vendors often try to please the customers and keep them happy with gifts, etc. If he accepted the hospitality, it would place him in a position where he would lose the ability to make unbiased and objective decisions, apart from breaching his company’s Code of Conduct. He politely declined Jay’s invitation and stuck to healthy practices as per the policies of his company.

Rainmaker is combating bribery & corruption and making workplaces better through awareness & sensitisation, delivered through blogs, newsletters, webinars, self-paced modules, and training sessions for all.

Read more about curbing bribery and corruption in the workplace here: https://rainmaker.co.in/how-are-bribery-and-corruption-hurting-your-organisation/

Just Launched – Code of Conduct E-Module

Rainmaker’s new module on Code of Conduct, covering various topics including bribery & corruption, whistleblowing, conflict of interest, information security, prohibited substances, data privacy & protection, brand image and social media guidelines, creating inclusive workplaces and gifting policy has just been launched. Check it out at the Rainmaker homepage.

Let us strive for a healthy and ethical workplace for all.

*All names & characters mentioned in the blog are fictional.

References:

Author: Gayathri Madabhushi Editor: Sumali Nagarajan

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