Whether part of local customs, relationship building or ways to give thanks, gift giving and hospitality (collectively referred to here as “Hospitality”) is a sizable business, with the global market being estimated at USD839 billion in 2024.[1] With the Christmas festive season just behind us, and Lunar New Year around the corner, this time of year sees many opportunities worldwide to celebrate with business contacts and associates and, often, to engage in hospitality as a way to express gratitude. Given this, we thought it timely to explore some of the persisting challenges faced by organizations in effectively managing hospitality as part of wider Anti-Bribery & Corruption (“ABC”) risk management frameworks and the best practices in mitigating these risks.
Establishing Robust Policies and Procedures
Many organizations have developed comprehensive policies and procedures featuring value-based limits, approval chains and logging requirements for ongoing monitoring of corporate hospitality activities. In our experience, hospitality is typically an area where organizations have established policies and procedures and are quick to highlight metrics and compliance with established procedures.
Generally, Hospitality is governed by formal and transparent rules, but these can change according to local laws, regulations, and business practices. For example, in Singapore, civil servants cannot retain any gifts worth SGD50 or more, unless they pay the value of the gift to the government. Meanwhile, the tax law in Singapore considers that a gift exceeding SGD200 is considered substantial and taxable to the recipient. Based upon the government thresholds, it is reasonably common that corporates in Singapore adopt similar amounts as their hospitality thresholds.
In China, according to the criminal law, specific monetary thresholds (starting at RMB10,000) define who can (or cannot) be prosecuted for bribery offences. Mainland China government bodies or state-owned entities take a very conservative approach and often set a low value (e.g., RMB200) as being permissible for accepting Hospitality. Consistent with the approach of government organizations, it is not uncommon to see corporate organizations in Mainland China setting thresholds varying from RMB200 to RMB1,000+ as being acceptable for Hospitality with business associates, and often much lesser amount for Hospitality with government officials.
For multinational organizations, it is crucial to align its Hospitality policies and procedures to the local regulatory requirements at a minimum. For such policies and procedures to be effective, they must be both nuanced and explicit, guiding employees through ambiguous situations and deviations. Hypothetical scenarios and the “do’s and don’ts”, examples of red-flags, and different monetary thresholds for Hospitality with government and non-government officials / employees should be outlined in the relevant policies and procedures. Approval thresholds for Hospitality should be proportional, reflecting the nature, scale, complexity, and local context of an organization’s activities.[2] Organizations should also consider setting thresholds in local currency that employees can easily refer to and provide training on such policies, procedures, and thresholds.
Looking a gift horse in the mouth: “Intention to influence” & frequency
A holistic approach to reviewing hospitality involves analyzing the broader context of the business relationship, specifically the intent and frequency with which the hospitality is offered or received. Intent to gain an unfair advantage or “influence” is a critical marker of bribery, often accompanied by frequent hospitality, indicating a pattern of potentially corrupt activity.[3]
According to the International Journal of Public Administration[4], the difference between a gift and a bribe is often context-dependent and influenced by culture. The challenge is that in different cultures, the boundary between respectful business interactions and bribery can be blurred, making it challenging for employees to properly identify the risk (or making it easy to exploit for those determined to circumvent the controls). By way of example, festive hampers containing fruit and alcohol are common corporate gifts and are not usually perceived as lavish. However, the Chinese alcohol “Maotai” or high-end produce in Japan or Korea, which are often very expensive, may imply an intention to influence.
When monitoring hospitality, two aspects are crucial: reviewing declared hospitality over extended periods and assessing the timing in relation to business activities, such as tender discussions or policy changes. Additionally, organizations should scrutinize broader employee expense reimbursements and transactional data to detect undeclared hospitality, a common oversight that can be mitigated through tailored audits and control reviews.
Risky recipients: Government officials and auditors
Certain recipients pose higher bribery risk than others. Many companies prohibit employees from providing “anything of value” to government officials, aligning to the DoJ’s FCPA language.[5] When we work with clients on risk assessments or training initiatives, we often find that employees are aware of this risk and what their company policies say about it; however, in countries where the appreciation for definitions of bribery and corruption is less mature there is a tendency to view bribery as only related to cash payments and winning / retaining business.
Corporate hospitality offered to other recipients, including auditors, surveyors and experts present significant bribery risk, especially where the results impact licenses to operate or financial results. For example, an article published in 2018 by the China Journal of Accounting Studies explored the impact of hospitality, including free food and beverages, on independence in China's audit market.[6] This study, which collated market data from 2001 to 2010 argues that hospitality is linked to higher discretionary accruals and fewer modified audit opinions.
In our experience, we have also observed (in a variety of contexts) hospitality being used to sway the results of health, safety and worker welfare audits as well as to influence community leaders who are seen as important stakeholders.
To mitigate these risks, companies should incorporate specific scenarios into training and communication exercises, providing bespoke training on what may constitute a bribe, how to politely decline requests for bribes or how to report such approaches internally within your own organization. Clear communication on potential consequences and outcomes (for the company and for the individual) can reinforce the importance of avoiding these activities. Updating policies to cover non-client-related advantages and designing monitoring activities that consider non-client-related hospitality can further strengthen compliance efforts.
Charitable Donations as an Alternative
With growing commitment in corporate social responsibilities, organizations are increasingly opting to provide charitable donations instead of gifting to clients, third parties and other associations. It is important to carefully review the recipients of such donations to ensure they avoid any perception of expecting business favors, such as contracts or licenses, in return for donations.[7]
In 2016, Nu Skin Enterprises agreed to pay USD765,688 to the Securities and Exchange Commission (SEC) to settle charges for violating the FCPA, after in 2013 its Chinese subsidiary made a RMB1 million donation to a charity chosen by a high-ranking Chinese official to impact an ongoing investigation.[8]
Clear guidance and communication around donations as forms of gifts is necessary to ensure employees understand the risks and how to appropriately mitigate them. Due diligence on charities, even for one-off contributions, should consider the charity’s public profile and values, selection process, legitimate purpose, and any connections to public officials. The screening process should highlight potential conflicts of interest so that the organization can make an informed decision on whether the payment will be appropriate.
Receiving gifts
Accepting a bribe under the guise of hospitality can be as damaging as accepting a direct bribe,[9] yet monitoring the receipt of hospitality, is more complicated.
The use of registers (and associated review of the entries in such registers on a regular basis) is common practice, allowing employees to disclose instances in which they have received Hospitality. Training and establishing a widely understood and accepted common culture around ethics and compliance is critical to mitigating risk around accepting Hospitality / bribery & corruption.
Some successful tactics we have observed include training which uses scenarios to clearly define how hospitality can be seen as bribery. Scenario-based learning helps employees consider the context of the hospitality, the intent behind it, frequency and timing. Focusing this training on higher risk functions such as sales, and those charged with managing suppliers and partners helps keep this exercise proportionate. As the context around hospitality can change across jurisdictions, companies should emphasize channels for employees to utilize when in doubt over potentially unethical or corrupt activity.
Conclusion
In conclusion, while hospitality plays a vital role in fostering relationships and expressing gratitude within the business world, it also poses significant risks that organizations must manage carefully to avoid ethical and legal pitfalls. The complexity of distinguishing between genuine hospitality and bribery highlights the need for clear, culturally aware policies and robust monitoring systems.
By adopting a nuanced approach that incorporates comprehensive policies and procedures, regular training, clear and on-going corporate communication, and diligent monitoring and oversight, businesses can ensure that their hospitality practices align with internal and regulatory ABC frameworks. As the global business landscape continues to evolve, it is crucial for organizations to remain proactive in addressing the challenges associated with corporate hospitality, thereby safeguarding their integrity and reputation.
As we are in the season of Hospitality, be vigilant of the bribery & corruption risks around corporate hospitality to you and your organization. Consider sending timely communication to remind your employees of compliance, emphasizing the requirement to register or seek approval for hospitality activities, reviewing your ABC frameworks, or seeking advice from external risk and compliance experts. We have extensive experience in conducting risk assessments, strengthening controls around gifting and hospitality practices and undertaking investigations into potential or alleged bribery should concerns arise. For more information about how we can support your organization, please contact Lorynn Demetriades, Alecia Futerman and Gina Yao.
[1] Corporate Gifting Market Report 2024 - Corporate Gifting Market Opportunities And Research
[2] The Ethics of Gifts & Hospitality | Institute of Business Ethics - IBE
[3] Per the UK Bribery Act 2010 (UKBA) section 6, for a gift or hospitality to be considered a bribe there “must be an intention for a financial or other advantage” to influence the recipient. The Bribery Act 2010 - Guidance – Page 12
[4] Graycar and Jancsics Gift.pdf
[5] Criminal Division | Foreign Corrupt Practices Act
[6] Hospitality and auditor independence: do gifts blind the eyes?
[7] The Bribery Act 2010 - Guidance – Page 40
[9] The UKBA highlights the risks of requesting, receiving, or accepting a bribe: UK Bribery Act 2010 - Explanatory Notes, p. 4
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© Copyright 2025. The views expressed herein are those of the author(s) and not necessarily the views of Ankura Consulting Group, LLC., its management, its subsidiaries, its affiliates, or its other professionals. Ankura is not a law firm and cannot provide legal advice.
