Gifts and hospitality may never be used to secure an improper advantage or otherwise inappropriately influence the recipient.

The good practices set out below are drawn from the MTI companies’ internal policies and procedures and aim to give an overview of the main points that must be addressed when implementing measures to prevent inappropriate giving or receiving of gifts and hospitality. The case scenarios below are based on the experiences and policies of the MTI companies and are offered by way of additional help to companies facing similar situations.

Everything you need to get up and running

Gifts - Anything of value given or offered to a person, it also includes anything of non-economic value such as a favour, benefit or other intangible item that is of value to the recipient.

Business hospitality – The provision of travel, transportation, lodging, meals, invitations to conferences and events, entertainment and other similar forms of treatment towards Third Parties. If no representative of the company providing the hospitality is present, then the hospitality should be treated as a gift.

Public Official – sometimes called government official these include the following persons:

• All officers and employees at any level of a government department or agency whether executive, legislative or judicial;
• Candidates for political office;
• Political party officials;
• Any official, employee or agent of an entity under government ownership or control (e.g. a state-owned enterprise); and,
• Employees of public international organizations (e.g. UN, World Bank, EBRD, OECD etc.)

Family members of any of the above should also be treated as Public Officials for the purposes of gifts and business hospitality. Any of the above who directs or asks that gifts or business hospitality be given to any other individual, should cause that individual to be treated as a Public Official.

MTI good practices

MTI companies are committed to implementing clearly articulated policies and procedures to govern the provision and receipt of gifts and business hospitality.

MTI companies are committed to designing risk-based controls that dedicate a proportionate level of resources to gifts and business hospitality risks compared to other activities.

Gifts that are received or business hospitality offered in advance of the event and that exceed policy limits will be politely declined and dealt with in accordance with a transparent procedure. Spontaneously offered business hospitality that appears likely to exceed a company’s internal policy limits should be similarly declined unless it would be highly offensive to the host to do so. In such a scenario, it would be advisable for the recipient to advise their manager/compliance at the earliest opportunity after the hospitality.

The following criteria must all be met when considering the provision of gifts or business hospitality.

• The giving of the gift or business hospitality is not intended to improperly influence the recipient to award new business or to retain existing business or to secure any other improper advantage.
• The giving or receipt of the gift or business hospitality is legal, ethical and in accordance with local social norms.
• No cash gifts or cash equivalents.
• Gift giving should be infrequent, appropriate, and always justifiable (see below for further clarification).
• Business hospitality should be incidental to legitimate business, proportionate and always justifiable.
• The proximity of gifts and business hospitality to an award of business may present increased risk and or conflicts of interest.
• Some gifts and business hospitality can expose companies to increased risks. For MTI companies these include:
  • In relation to factory reference visits
  • Handover events associated with turnkey projects and other similar events
  • If a third party provides gifts and or business hospitality on behalf of its principal, an MTI company
  especially when involving Public Officials.

Increased risks mean that stricter rules apply to all gifts and business hospitality involving Public Officials, including:

• Ensuring that the proposed gift or business hospitality is acceptable under the Public Officials’ own internal rules as well as all applicable laws and regulations.
• Applying lower monetary thresholds for approvals, and escalating levels of approvals within the business as well as compliance.

Escalating levels of approvals should be required as the risk from the provision/receipt of gifts and hospitality increases.

The following clarifications are generally considered acceptable and good practice:

• Infrequent gifts mean once per year at most, unless purely ceremonial and for general display purposes.
• All gifts should be of moderate value, low value company branded items as gifts are always preferable.
• Refreshments of modest value provided during business meetings are an acceptable form of business hospitality.
• Local travel to the city center, airport, business meeting venue or production facilities by public transport or similar, are acceptable forms of business hospitality. Local travel distances should be defined according to a company’s policy.
• Travel cost requests for third parties will include a review of the itinerary in order to avoid side trips, tourist and vacation destinations.
• For some companies, thresholds for gifts and entertainment are a valid and acceptable approach. Regional variations for such thresholds may also be reasonable in the circumstance as long as the approval for any regional policy that permits variations is given by the Head of Compliance at headquarters.
• Some internal employees and their external counterparts in third-party organizations present increased risks for receiving gifts and business hospitality in particular. For such persons it may be appropriate to further limit the giving and receipt of gifts and business hospitality or to apply strict approval criteria and additional controls.

Approvals

Approval processes take varying forms and there is no one-size fits all. MTI companies should ensure compliance with their standards through appropriate internal controls, escalations and approval mechanisms. Examples of approval processes include a scorecard or traffic lights approach. These are summarised in the Appendix as possible examples for other companies to adopt.

Appendix

Examples of Approvals Procedures

Approvals procedures using a Scorecard

Giving a gift or business hospitality (together called ‘benefit’ in this example)

Questions guide the employee through an evaluation of the risk and the necessary approvals, before a benefit can be provided/accepted to/from third parties.

The questions include:

1. Benefit category: Hospitality? Gift? Other benefit?
2. Occasion: Proximity to a pending business decision (Y/N)
3. Public Official: (Y/N)
4. Frequency – within 6 months to the same recipient. (Y/N)
5. Invitation of spouse, life partner, relatives or guests (Y/N)
6. Value of benefit (4 ranges according to the country)
7. Level of the donor/host (Senior Management, Management, Employee)
8. Level of recipient/invitee (Management Board, Senior Management, Management, Employee)

According to the answers, the score is calculated automatically and also takes account of the country risk where the benefit will be provided. In addition, the following apply:

• The approval of the Line Manager is mandatory and depending on the score, Compliance Officer approval could be required before providing the benefit.
• Mandatory principles G&H must be applied, as set out in Section 3 MTI good practices above.

Accepting a benefit (the use of the scorecard is voluntary)

The questionnaire is the same as above, but its usage is voluntary. The recipient can fill it out to help guide their decision-making process, before accepting a benefit from a third party.

Internal approvals process

The approval steps depend on the value per person for the invitation, for example these could be set as follows:

• ≤ 500 EUR Line Manager and local Compliance approvals are required.
• >500 EUR Line Manager, Local Compliance and Global Compliance approvals are required.

After the final approval step, proof of the approval will be needed to serves as relevant evidence. Information about gifts and hospitality that have been subject to approvals should be appropriately documented.

Information to be recorded includes:

1. Name and company of invited person
2. Date/duration of the visit
3. Reason for the visit
4. Agenda of the visit
5. Type and value of the provided benefit per person

The above information may also need to conform to data privacy requirements as well as other internal policies.

Approval procedures using a Traffic Lights system

The traffic lights approach is a multi-step approval process. Each person who is involved in approving (green light) or rejecting (red light) the request does so based on the information and documents provided by the person requesting the approval. The approval levels depend on the pre-determined thresholds up to the highest hierarchical level, where necessary. Ultimately, the application is approved only if each person involved gives a “green light”.

 Download Guidance as PDF