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The Perils of Presents

While its common in some countries for business executives to exchange gifts, companies risk running afoul of the Foreign Corrupt Practices Act.

By Susan Kelly | Updated on February 18, 2015
This week marks the start of the Chinese New Year, traditionally an occasion when gifts are exchanged not only by family members, but also by business associates. U.S. companies that operate in China have to tread carefully when it comes to presenting gifts to government officials, though, because of the U.S. Foreign Corrupt Practices Act.

The FCPA, enacted in 1977, prohibits bribing foreign officials, and that prohibition casts a shadow over corporate gifts. Scott Moritz, a managing director at Protiviti who leads its investigation and fraud risk management practice globally, said just giving a gift doesn’t violate the statute. “There has to be intent to influence some sort of business decision that then could result in an unfair business advantage,” Moritz said.

The simplest way to comply with the FCPA would seem to be eliminating all gift-giving. But companies have to take into account the culture of the countries in which they do business, and in many countries, that culture includes gifts.

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