It is that time of year when gifts among friends are common, but if those friends are in private firms and public agencies, those gifts can cost both parties their careers. Even the appearance of impropriety can create a public relations nightmare. It is vital that firms act in compliance with applicable laws. Gift-giving laws vary depending on the branch of government or particular agency.
It is not always easy for firms to take the rules seriously. Often, holiday parties and gifts are seen as just tokens of friendship rather than attempts at influencing decisions. Some firms actually evade spending restrictions by taking full advantage of things like “friendship exemptions” and dividing bills for gifts among several people to stay under spending caps. With increased scrutiny of reduced government expenditures, what once might have been considered acceptable could lead to criticism, contracting constraints, and even criminal charges.
Most professional service firms do not try to get around gift limits, but many are unaware of the rules or how the rules are changing in this era of increased transparency, tighter restrictions, and efforts to remove or restrict the power of government employees. Few companies have well-established compliance mechanisms. Here are some tips:
- Make sure you know the laws and monitor changes. It may not be acceptable to pay an official an honorarium, but it may be acceptable to invite a public official to speak and donate the honorarium to the official’s charity of choice.
- Recognize the difference in rules for executive, legislative, and administrative agencies. Misapplying limits may jeopardize a firm’s credibility and the official’s reputation.
- Communicate limits to those performing “public relations” for the company, including any consultants.
- Develop a compliance mentality. Implement audit systems and make sure internal groups are not in charge of policing themselves.
- Design an internal compliance coding system for government relations expenditures to track everything sent over the holidays, ensuring that annual spending limits are not exceeded.
As we see more federal money being spent directly or through state agencies for infrastructure rehabilitation and expansion, we will also see increased vigilance in the federal monitoring of the state and local disbursement of that money. There is an administrative emphasis on eliminating corruption in the process and that emphasis is likely to focus on the relationships between government officials and private sector contractors.