Clifford Chance

Guidelines on the management of Gifts and Hospitality published on 11 September by the French Anti-bribery Agency ("AFA") specify some good practices but leave some room for corporate entities to tailor their Gifts and Hospitality policy to their risk profile.

The AFA published the final version of its practical guide on Gifts and Hospitality, intended for corporate entities, state-owned industrial and commercial establishments, associations and foundations after a long public consultation on a draft guide. These guidelines provide a reminder of the purpose of such a policy, propose a method for its implementation and enumerate some good practices, already adopted by some corporate entities. The AFA underlines that the guide is not legally binding and reminds us that the adoption of a Gifts and Hospitality policy is not a legal requirement.

Purpose of the Gifts and Hospitality policy

AFA states that gifts and hospitality "are ordinary acts of business life and as such do not constitute acts of corruption". The authority admits that while the vast majority of gifts and hospitality do not reflect the existence of acts of corruption because they are offered or accepted as a courtesy or for commercial purposes (e.g. sports and cultural hospitality), in certain circumstances - when their purpose is to determine the accomplishment or non-accomplishment of an act by a person, in disregard of his legal, contractual or professional obligations - they may constitute acts of corruption or influence peddling. It therefore encourages companies to put in place a Gifts and Hospitality policy in order to mitigate these risks.

Content of the Gifts and Hospitality policy

The AFA leaves companies free to prohibit or regulate the practice of gifts and hospitality. In the event of a choice for a framework policy, rather than an absolute prohibition, the AFA encourages companies to define rules that (i) take into consideration a certain number of substantive elements and (ii) explain the process (including authorization, where appropriate).

Substantive elements

The AFA reminds that the fraudulent nature of the gift lies in its purpose rather than its nature or amount. The authority therefore suggests that the policy expressly mentions the prohibition on offering or receiving a gift with a view to performing or not performing an act, and that this prohibition be accompanied by concrete illustrations.

With respect to the value of the gift or hospitality, the AFA considers it is optional to set thresholds beyond which the gift or hospitality must be refused. It specifies, however, that in practice, if the company chooses to set a threshold (which has the advantage of being more easily understood by employees), this threshold may be determined or within a range. Conversely, if the company does not choose a numerical threshold, the AFA validates the possibility of using qualifiers (such as symbolic, reasonable, modest, low) but recommends giving illustrations.

Likewise, regulating the frequency of gifts remains an option. In this respect, the AFA emphasizes that the company may set a maximum number of gifts and hospitality that may be received from the same third party by the same person during a given period, or require the beneficiary of gifts or hospitality to seek authorization from his or her superior before accepting the second gift.

The AFA also specifies that the company is free to establish different rules (i) between gifts and hospitality, (ii) depending on the type of gifts or hospitality or (iii) depending on the functions performed (for example, the rules may be stricter for the procurement team). The policy may also be adapted to local practices.

Process

If the corporate entity chooses to regulate the practice of gifts rather than prohibit it, the AFA recommends that the policy determine who can make the decision to accept or decline gifts. In practice, this decision will be made either by any employee, possibly with a reporting obligation above a certain threshold, or by the line manager or another person designated for this purpose.

The AFA also suggests that companies should be equipped with an IT tool depending on the volume of information to be processed. It also recommends setting out in the policy the questions to be asked before accepting or refusing a gift.

On the basis of good practices applied by certain corporate entities, the AFA recommends more specifically to:

• Mutualize gifts received (for example, organizing a lottery or donating to charities); 
• Set up a gifts and hospitality register which is already generally requested by AFA agents in the event of an audit.

Consistency and coordination with the other aspects of the compliance programme

The AFA considers that this policy must be implemented in consideration of the size and means of the corporate entity and the risks to which it is exposed. As such, it must therefore be consistent with the risks identified by the company's risk map.

The practical guide also recommends that it should comply with the code of conduct and other procedures (expense reports, sponsorship, etc.). With regards to its articulation with the code of conduct, the AFA specifies that the code may include or repeat elements of the Gifts and Hospitality policy, or make express reference to it.

Implementation of the Gifts and Hospitality policy

The AFA specifies that the Gifts and Hospitality policy is intended to apply to all employees (including corporate officers, casual employees, interns, temporary workers), and must therefore be widely circulated within the company (via publication on the intranet site, by e-mail, posting in common areas, etc.). The AFA also recommends that it applies to the company's business partners through contractual provisions or a document relating to the provisions applicable to suppliers (for example, a responsible procurement charter).

Moreover, the AFA recommends that training on the Gifts and Hospitality policy be provided to the most exposed employees, preferably in person.

Finally, in order to monitor the effectiveness of the policy, the AFA recommends that the policy be subject to a three-stage control, in line with its recommendations in terms of internal monitoring:

• Management control over requests for authorization to accept gifts and hospitality and expense receipts – first line of defence;
• Accounting control via the accounting recording of gifts – second line of defence; and
• Control by internal audit - third line of defence.