A SECTION FOR ENTREPRENEURS: Crash course - An innocent gift - or a bribe?

A SECTION FOR ENTREPRENEURS: Crash course - An innocent gift - or a bribe? - One of your managers has received a Christmas hamper stuffed with vintage champagne, fine wines and smoked salmon from a supplier who is bidding for a big order you're going to p

by ALEXANDER GARRETT
Last Updated: 31 Aug 2010

One of your managers has received a Christmas hamper stuffed with vintage champagne, fine wines and smoked salmon from a supplier who is bidding for a big order you're going to place in the New Year. Should you insist it's sent back? Are your other employees receiving lavish gifts? And will those engraved ballpoint pens you sent to customers seem pitifully inadequate by comparison?

MAKE THE RULES CLEAR. Most large companies have specific guidelines on giving and accepting business gifts, usually included in the employees' code of conduct, code of ethics or the employment contract. Simon Webley, head of research at the Institute of Business Ethics, says: 'A lot put a limit on the value of a gift you are allowed to accept - say, pounds 25. Others say that only gifts of a trivial nature may be accepted - perhaps a diary at Christmas.'

INCLUDE YOUR CONTRACTORS. Some companies spell out to contractors that they risk losing their contract if they give gifts or inducements to the firm's employees. Guy Dehn, director of whistleblowers' organisation Public Concern at Work, says: 'It takes two to tango, and it takes two people to be corrupt. So you should send out just as strong a message to suppliers as to your own people.'

APPOINT A REFEREE. Choose somebody to rule on questionable gifts. Some US companies now have an ethics officer, and BP is one of the first UK companies to follow suit. The personnel director or finance director are alternative candidates.

BE TRANSPARENT. One of the best protections your company has against generosity influencing commercial decisions is to record any such largesse so that it is out in the open. You could limit it to gifts with values above a certain threshold, so that free mousemats and paperweights go unrecorded.

AVOID OFFENCE. If turning down a gift would offend, find a good cause to donate it to. Alistair Kendrick, a director of Ernst & Young says: 'If someone sends you a present that is against company policy to accept, you could raffle it for charity and write a thank-you explaining what you've done.'

BEWARE OF BRIBERY. If you hand over money or a gift in return for a benefit to yourself, it's a bribe - and a criminal offence. Soliciting a gift in return for favours is extortion. Make sure that there are no strings attached to any gift you either supply or accept.

NEVER GIVE OR ACCEPT MONEY. A pounds 20 note might be worth less than a bottle of smart champagne, but whereas the latter might be construed as a token of goodwill, a gift of cash will be seen as a backhander.

DON'T APPLY DOUBLE STANDARDS OVERSEAS. It's no longer the done thing to bribe your way to contracts in the Third World. The Government is about to make it an offence to do so. If local culture demands that gifts are exchanged, keep it small.

BEWARE THE TAXMAN. Gifts aren't tax-free and neither is hospitality. The latter must be declared as entertainment and is liable to Corporation Tax, says Kendrick. Gifts worth more than pounds 15 are treated as a benefit in kind and render the recipient personally liable, usually for any value in excess of pounds 100. But a company making gifts can cover the tax - and National Insurance - itself by making a return to the Revenue of all its gifts under the Taxed Award Scheme. 'If the person you are giving to pays a higher-rate tax, it will cost you an extra pounds 87 for every pounds 100 the gift is worth,' explains Kendrick 'It's expensive, but this is an easy area for the Revenue to target.'

DO SAY: 'Thank you for the marvellous hamper, which we've decided to donate to our local hospice.'

DON'T SAY: 'We're having a golfing weekend in the Algarve. Bring the missus and we'll discuss what contracts you've got coming up.'

Find this article useful?

Get more great articles like this in your inbox every lunchtime