A Simple Case Study About Meals and Travel Reimbursement Under Anti-Bribery
|January 29, 2017||Posted by admin under English|
The landmark GSK case has indicated a new era when robust anti-bribery enforcement against the giving side has become the norm in China with reference to the counterpart under FCPA. Among others, under PRC law, the concept of “property or things” as the vehicle of bribery is as broad as “Quid Pro Quo” which refers to money or anything of value intended to operate, or which may reasonably be perceived as operating, to influence an action or decision. And when we talk about “anything of value”, such definition does include any monetary or non-monetary advantage, including but not limited to cash, cash equivalents, gifts, inflated commissions, unauthorized rebates, political or charitable donations, offers of employment, excessive entertainment, meals, travel-related expenditures (even if those expenditures are paid directly to a travel vendor), services, loans, subsidies, training and sponsorships, etc.
In light of the above, it is not surprised that the issue about meals and travel reimbursement are raised in almost every training or seminars we gave to client about anti-bribery and compliance. This is especially the case in China as it is normally more difficult to deal with this issue properly due to cultural and compliance environment considerations. Therefore, we would like to share a simple but representative hypothetical case as the starting points for the readers to consider their internal compliance program.
New customs regulations have been approved and your company are facing difficulties in their implementation. As the best working achievement of the year for your government relation team, the governmental official who participated in the drafting of the new regulations has eventually agree to the long due invitation to give a presentation on the implementation of the new regulations so that your company can eventually have a sense about what the vague provisions set forth in the regulations actually mean.
Here comes the question: although the government official accepts the invitation, he explains that the customs department has no budget to cover the expenses of travelling to your company facilities, which are located in a different city, and request your company to reimburse all the expenses (travelling, accommodations, meals, etc) in relation to the presentation. When your government relation team makes the counter proposal that your company can sent representative to the government official’s official, such proposal is declined as the government official feels uncomfortable to give presentation in his own office to one single company.
How should you deal with such request? Would you give up such wonderful opportunities simply because the meal and travelling expenses which may or may not be that substantial?
There is normally no clean-cut right or wrong in such circumstance. Normally the business call will choose to proceed so what can be done from legal perspective is to mitigate the risks to the extent possible. And one of the key mitigation plan is to document the intent and procedure for anti-bribery as evidence for potential future challenges.
The following are some actions for considerations:
- Confirming that there are no pending assessments or issues involving your company.
- Confirming the legitimate business purpose (i.e. training on the new regulations) and clearly and expressively document such business purpose;
- Clearly communicated to the government official about existing internal anti-bribery policies (i.e. reasonable costs, no Quid Pro Quo, no side activities, requirement for receipts) , if any, and confirmed if the expenses are in line with the foregoing policies, these expenses are permissible.
- If your company did not have the foregoing policy in place yet, it is the right time to prepare a set.
- Where possible, the payment should be arranged for the travel by a third party agency and pay the said vendor(s) directly.
- Where possible, your company should seek written confirmation from the government official’s supervisor that your company paying for these expenses is permissible from the government entity’s
- The expenses must be pre-approved and properly recorded in your company’s books and records by means of well seasoned forms about hosting travel and entertainment documentation / forms through transparent company expense reporting system.
- Likewise, if your company do not have the foregoing documentation or system in place, it is the high time to prepare a set.
- In any event, the timing and duration of the visit should be organized so as to minimize travel costs, such as the need for accommodation.
Please note that this article is not contemplated to exhaustive or be relied upon as formal legal advice. Should you wish to know more about the details of this particular area of law, please send an email to firstname.lastname@example.org we would be more than happy to hear from you.