Does your Company need a Gift Policy? Ask Immanuel Kant...

Immanuel Kant was an 18th century German Prussian philosopher born in the city of K?nigsberg in East Prussia, now present-day Kaliningrad, Russia (certainly Vladimir Putin could learn from his teachings).

Kant, for whom ethics is based on categorical imperatives, commanded that we must obey unconditionally. For Kant, ethical imperatives typically contradict our self-interest, our judgments of what is pleasurable or useful. His major premise was that one should only act in accordance with rules that could hold for everyone. He argued that moral law is a truth of reason, and therefore that all rational creatures are bound by the same moral law.

We can assume that if Kant were to be reborn in the 21st century, he would be a leader in ethics and compliance. And if you had him in your Company, he would be a great asset.?But since that is not within the realm of possibility, companies need to enact and implement policies to guide the behavior of the members of the organization, from the Board of Directors through the C-Suite and all the way to the mail room (if that still exists?).

One area that requires special attention and the use of common sense is gifts. It is recommended for any Company, regardless of size or industry, to have a gift acceptance policy in place, whether it be a standalone policy or as part of a Code of Ethics/Conduct. ?In the case of directors and corporate officers it goes to the core of their duty of loyalty. This duty refers to the responsibility to act in good faith and in the Company's best interests, not the interests of the director or a family member or his/her close friends. Directors and /or corporate officersshould not use their positions for personal gain.?They may not accept gifts from people or entities who deal with the Company, specially in those cases where any such gift is more than modest in value, or where acceptance of the gifts could create the appearance of a conflict of interest.

A good rule of thumb is New York Stock Exchange Rule 303A.02 which defines 'immediate family' to include a person's spouse, parents, children, siblings, mothers-in-law and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law, and anyone (other than domestic employees) who share such person's home.

Directors, officers and employees?should not solicit or accept for personal benefit directly or indirectly any gift, loan, discount or any item of substantial monetary value from any person or company that seeks to conduct or is currently conducting business with their Company. That includes suppliers, consultants, vendors and any other third party. Gifts, meals and accommodations of a reasonable and normal value provided to directors and officers may be accepted, but in the interest of transparency should only be accepted in very rare occasions and consulted beforehand with the Compliance and Legal Departments on the appropriateness of any gift exchange.?It is also advisable that even if the gift passes muster it be recorded by the Company. In fact, directors, officers, employees, representatives, and agents of the Company who may have an actual or potential conflict should report all pertinent details in writing.

In fact, companies that conduct business internationally must abide by all applicable anti-bribery laws, including the U.S. Foreign Corrupt Practices Act of 1977, as amended, 15 U.S.C. §§ 78dd-1, et seq. ("FCPA") and the local laws in every country in which they undertake business. These laws prohibit bribery of government officials, and regarding the FCPA, it mandates that companies establish and maintain accurate books and records and sufficient internal controls. The FCPA can be a good guide to follow domestically as well.

A gift policy must include vendor or potential vendor or supplier- provided food, beverages, meals or entertainment such as concerts, sporting events or galas. Everyone should avoid accepting gifts that are meant to, or appear to, influence company choices. Such gifts can damage client relationships, harm its reputation, and may jeopardize the Company's legal standing when accepting them.

A well drafted and implemented gift policy promotes “the highest standards of ethics in the Company, and ensures that directors, officers and employees practice equal treatment, unbiased professionalism and non- discriminatory actions” (See https://www.liveabout.com/gift-policy-1918897).

When in doubt, remember the teachings of Kant and err on the side of caution: that all rational creatures are bound by the same moral law. ?

#compliance #ethics