Encouraging Employees to Break the “Rules” to Do the Right Thing
Lauren Connell of The Volkov Law Group joins us again for a posting about corruption and gifts and hospitality. Her profile is here and she can be reached at [email protected].
Laws and regulations draw black lines in often-gray areas. That is their purpose; they exist to make it easier to tell what is “wrong” and what is “right” (as defined by whoever made the law).
The U.S. government has drawn its own line for members of Congress. The 1978 Ethics in Government Act requires members of Congress to file annual reports disclosing, among other things, gifts and travel reimbursements received. But gray areas remain. Just because a member of Congress reports a gift or a gift is small does not mean it wasn’t given with a corrupt intent.
For gifts and travel reimbursement, the line drawn is $350. Anything above that must be disclosed. The goal of requiring disclosure is to prevent quid-pro-quo “gifts,” also known as bribery. Anything above $350 is suspicious and we want the public to be able to see it.
Companies’ Gifts, Meal and Entertainment Policies also draw lines, often outright prohibiting gifts and travel payments without a “business purpose.” But there are a million different ways to define “business purpose.” I often tell employees to think about how a gift or travel reimbursement would look if it was written about in a news article. Would it be embarrassing for you or the company? If so, it probably doesn’t have a legitimate business purpose.
When a recent Washington Post article came out titled “Congress trip secretly funded by foreign nation,” I knew that I was about to get more examples of what is not okay when it comes to travel reimbursement. I was not disappointed: “Lawmakers and their staff members received hundreds of thousands of dollars’ worth of travel expenses, silk scarves, crystal tea sets and Azerbaijani rugs valued at $2,500 to $10,000, according to the ethics report. Airfare for the lawmakers and some of their spouses cost $112,899, travel invoices show.” The facts and circumstances only get worse.
This is precisely the type of headline every company wants to avoid.
Granted, the picture is confused by Azerbaijan’s sneaky tactic of funding a non-profit that then funneled the trips and gifts to members of Congress. So the “gift” was not a direct quid-pro-quo. But the state-owned oil company of Azerbaijan had an agenda, having important legislation impacting their oil production abilities before the U.S. But the nuance is lost in the big picture: this trip was lavish, exotic, and expensive.
Circumstances such as these should remind us that drawing lines is not enough, you have to make sure your employees, managers, officers and directors understand the big picture. People like certainty and monetary limits provide important safe harbors. But that should not be the end of an inquiry, every employee should not only ask if a gift or travel benefit is against the rules, but also if it is within the spirit of the rule.
You want your employees to “break” the rules if it means obeying the spirit of the rule: turning down the all-expenses-paid trip to a suppliers training session when that training session is held on a beachside resort or deciding not to promote your products by putting on a seminar that consists of two hours of presentations each day and two rounds of golf. While each could arguably be justified as having a business purpose, when you look at the full picture it is clear both violate the spirit of a “business purpose.” Make sure your employees can recognize the difference.
[…] of the BHP case and rounds out the week. Tom Fox talks FIFA. Mike Volkov looks at Washington and encourages employees to do the right […]