Close X
Attorney Spotlight

How did Sylvia Yi's previous work at the Department of Homeland Security prepare her for working with government contractors at Bass, Berry & Sims? Find out more>


Close X


Search our Experience

Experience Spotlight

On December 1, 2016, Parker Hannifin Corporation and CLARCOR Inc. announced that the companies have entered into a definitive agreement under which Parker will acquire CLARCOR for approximately $4.3 billion in cash, including the assumption of net debt. The transaction has been unanimously approved by the board of directors of each company. Upon closing of the transaction, expected to be completed by or during the first quarter of Parker’s fiscal year 2018, CLARCOR will be combined with Parker’s Filtration Group to form a leading and diverse global filtration business. Bass, Berry & Sims has served CLARCOR as primary corporate and securities counsel for 10 years and served as lead counsel on this transaction. Read more here.

Close X

Thought Leadership

Enter your search terms in the relevant box(es) below to search for specific Thought Leadership.
To see a recent listing of Thought Leadership, click the blue Search button below.

Thought Leadership Spotlight

FCPA: 2016 Year in Review & 2017 Enforcement Predictions

A review of trends and developments in FCPA as well as a look ahead into what to expect for 2017. This report aims at providing corporate leaders and companies with the knowledge they need to comply with the FCPA and avoid litigation in 2017.

Read now

FCPA Resource Guide Action Items, Issue 4 – Gifts, Hospitality and Entertainment


December 12, 2012

This alert, the fourth in our series addressing the Resource Guide to the U.S. Foreign Corrupt Practices Act (available here) that was jointly released by the Department of Justice ("DOJ") and Securities and Exchange Commission ("SEC") on November 14, provides: (i) a concise explanation of the Guide's general principles regarding gifts, travel and entertainment; (ii) a summary of the Guide's examples of expenses that are either clearly appropriate or illegal; and (iii) practical action items.

Prior Issues in this Series

Issue 1 - Top DOJ Official Elaborates on New FCPA Resource Guide
Issue 2 - Elements of Compliance Programs
Issue 3 - Relationships with Third Parties

Gift-Giving & Hospitality FCPA Risk

Gift-giving and hospitality have been considered business activities posing heightened FCPA risk, particularly after recent enforcement actions like Securities and Exchange Commission v. Veraz Networks, Inc. in which the SEC cited flowers for a CEO's wife as a "questionable" expense. In the Guide, however, DOJ and SEC have given further advice to companies regarding corporate hospitality.

General Principles of Gift-Giving and Hospitality

The Guide recognizes that providing corporate hospitality is often an appropriate way to conduct business. In addition to specific examples discussed below, the government sets out "hallmarks" of appropriate gift-giving, including:

  • Giving the gift openly and transparently;
  • Properly recording the gift on the giver's books and records;
  • Providing the gift only to reflect esteem or gratitude; and
  • Ensuring the gift is permissible under local law.

Specific Safeguards to Reduce the Risk of Hospitality-Related FCPA Violations

In the context of the affirmative defense of "reasonable and bona fide" expenditures, the Guide also identifies safeguards related to hospitality expenses (as compiled from previous DOJ releases) which can be incorporated into a company's anti-corruption training and procedures:

  • Do not select the particular officials who will participate in a trip or program, or select them based on pre-determined, merit-based criteria;
  • Pay all costs directly to vendors and/or reimburse costs only upon presentation of a receipt;
  • Do not advance funds or pay for reimbursements in cash;
  • Ensure that any stipends are reasonable approximations of costs likely to be incurred and/or that expenses are limited to those that are necessary and reasonable;
  • Ensure the expenditures are transparent, both within the company and to the foreign government;
  • Obtain written confirmation that payment of the expenses is not contrary to local law; and
  • Ensure that costs and expenses on behalf of the foreign officials are recorded accurately in the company’s books and records.

The Guide does not insist upon specific procedures, but notes that "many larger companies have automated gift-giving clearance processes and have set clear monetary thresholds for gifts along with annual limitations, with limited exceptions for gifts approved by appropriate management." The Guide also observes that some companies "have created web-based approval processes to review and approve routine gifts, travel, and entertainment involving foreign officials and private customers with clear monetary limits and annual limitations."

Examples of Expenses Viewed as FCPA Violations

The Guide collects the following actual or hypothetical examples of FCPA violations that included gifts or hospitality:

  • "a $12,000 birthday trip for a government decision-maker from Mexico that included visits to wineries and dinners;"
  • "$10,000 spent on dinners, drinks and entertainment for a government official;"
  • "a trip to Italy for eight Iraqi government officials that consisted primarily of sightseeing and included $1,000 in 'pocket money' for each official;"
  • "one defendant paid personal bills and provided airline tickets to a cousin and close friend of the foreign official whose influence the defendant sought in obtaining contracts;" and
  • paying for a vacation to Paris for a foreign official and his girlfriend in exchange for confidential, non-public bid information from the company's competitors.

Examples of Expenses Viewed as Lawful

The Guide also presents a series of detailed hypotheticals relating to gifts, travel and entertainment. In the hypotheticals, the government affirms that promotional, branded gifts of nominal value are permissible. The Guide also goes further, however, and states that no FCPA anti-bribery violation would occur in the following scenarios:

  • A company invites customers (including some foreign officials) out for drinks and pays a moderate bar tab for the group;
  • A company provides a "moderately priced crystal vase" to a foreign official as a wedding gift and a "token of esteem or gratitude;" and
  • During the course of a contract with a foreign instrumentality, a company invites employees of the entity to its facilities in the U.S. to provide training. As part of the trip, the company pays for the hotel and transportation costs, including business class airfare. The company also pays for a moderately-priced dinner, a baseball game and a play.

Action Items

To the extent they are not already part of your compliance program, consider implementing the following action items:

  1. Incorporate the specific safeguards listed above into company training and procedures so employees can better avoid and detect questionable expenses;
  2. Require advance written approval of gifts, travel and entertainment expenses based on risk level;
  3. Set expense limitations specific to each jurisdiction in which your company operates;
  4. Track expenses that are related to particular government entities and/or officials so that the company can enforce annual limitations;
  5. Retain local counsel in advance who can opine on the legality of providing gifts and hospitality under local law; and
  6. For larger organizations, establish web-based approval of routine expenses.

Next in the Series

In early January, we will examine the government's views of risks arising from mergers, acquisitions and joint ventures in Issue 5. We will address confidential reporting and internal investigations in Issue 6.

For more information or assistance, please feel free to communicate with your regular contacts at Bass, Berry & Sims PLC, or the attorneys listed below. For more information and resources on this topic, please visit Bass, Berry & Sims PLC's webpage on Global Anti-Corruption/FCPA Compliance & International Investigations or International.

Related Services


Visiting, or interacting with, this website does not constitute an attorney-client relationship. Although we are always interested in hearing from visitors to our website, we cannot accept representation on a new matter from either existing clients or new clients until we know that we do not have a conflict of interest that would prevent us from doing so. Therefore, please do not send us any information about any new matter that may involve a potential legal representation until we have confirmed that a conflict of interest does not exist and we have expressly agreed in writing to the representation. Until there is such an agreement, we will not be deemed to have given you any advice, any information you send may not be deemed privileged and confidential, and we may be able to represent adverse parties.