People who are otherwise serious about the global scourge of bribery get frustrated when anyone raises the issue of gifts as bribes. Surely, most people will say, we haven’t reached the point where holiday gift-giving is so risky that we can’t hand out bottles of wine or silks tie and scarves. Even the enforcement agencies seem a bit exasperated. In its recent Foreign Corrupt Practices Act guidance, the U.S. Department of Justice sought to reassure the business community, emphasizing their focus on “. . . single instances of large, extravagant gift-giving (such as sports cars, fur coats and luxury items).” The U.K.’s Serious Fraud Office went further, dismissing the idea that they would be investigating “tickets to Wimbledon or bottles of champagne.”

So why, then, are companies still plagued by the labor-intensive policies that most companies implement to screen and approve gifts to customers and other decision makers? There are two forces at work here.

First, “reasonable” has no fixed meaning. I know that those in the field of antibribery compliance often resort to slippery-slope examples, but even the SFO would agree that weekly bottles of champagne cross a line and tickets to multiple sports events in the same season probably do, too. The DOJ covered this angle by adding to the guidance its interest in “widespread gifts of smaller items as a pattern of bribes.” Select any four compliance officers and they will disagree on whether a gift is reasonable; their response will vary depending on their upbringing, their personal gift-giving habits, their industry, their corporate budgets, and the demeanor and expectations of their customers. (Whatever you tell your children, “everyone else is doing it” does carry weight in the grown-up world.)

The second point is trickier and certainly didn’t originate with me: People are more likely to break the rules and generally behave badly if they’re one step removed from their wrongdoing. Dan Ariely, the author of the (brilliant) Predictably Irrational: The Hidden Forces That Shape Our Decisions (Harper, 2009), describes a study he did on this very topic. Students who were reluctant to cheat to win money cheated far more readily for poker chips, which could be converted into the same amount of money by walking to a “cashier” at a table just a few feet away.

I would argue that employees who would never peel off a $100 dollar bill to influence a government official, would lobby their employer whole-heartedly for a gift budget from which hundred-dollar pens and hundred-dollar bottles of Scotch could be purchased for that same official. Similar to Ariely’s experiment, these employees aren’t deliberately circumventing the company’s controls; they genuinely perceive their actions differently in the two situations.

I contacted Dr. Ariely and asked if he thought the application of his research to gift-giving as a form of bribery was appropriate. He captured the dilemma with this quote: “What is interesting about this issue (and worrisome) is that we don’t see how it works and we don’t see how it works on us.” This seems to be at the heart of the problem. Unlike bribes, gifts are generally perceived as positive, both in their own right and as a part relationship building. We have a personal history of giving and receiving gifts that is, for most, very happy. Even appalling gifts from distant aunts make us smile. Compliance officers who work to reduce or strictly monitor gift-giving in business settings are, as a result, perceived as holiday-squelching killjoys.

How can the pleasure of gift-giving be maintained while managing the corporate compliance risk associated with a practice the impact of which is so mysterious? There are some near-universal guidelines based on research my organization TRACE has undertaken for over a decade:

  • Gifts should be modest, tokens of esteem.
  • Ideally, they should bear the corporate logo or reflect the company’s products and they should be provided openly and transparently.
  • Delivering to an office is preferable to sending to a home address.
  • One gift-giving holiday or event should be observed. It doesn’t matter if it’s Diwali, Eid, the Lunar New Year, July 4th, or Christmas, but pick (only) one.
  • Perishable gifts of flowers or food are generally thought to be less risky, in part because they can’t be resold.
  • Give consistently and without regard to pending or recent procurement or other official decisions.
  • Follow corporate policy.
  • Document everything.
  • Give in good faith and without expectation of any quid pro quo.
  • A moderate annual affirmation of both new and longstanding relationships is not a bribe.

And with those guidelines in mind, have a very compliant gift-giving season and enjoy the holidays!

Alexandra Wrage is the president of
TRACE, an antibribery compliance organization offering practical tools and services to multinational companies. And, bribery or not, TRACE is giving away to the compliance community 10 of these tools and services this week and next in celebration of its anniversary and the season!