When does a gift become a bribe?

When travelling overseas, many executives find themselves having to get to grips with potentially awkward situations thrown up by different business cultures and norms.

One area mired in possible pitfalls is the issue of gift-giving.

In many countries, particularly in Asia, gift-giving is an essential aspect of the local business culture, and in some places a vital part of the process of meeting potential business partners.

Some business travelers, for example, have been told to present small gifts to personal assistants of business prospects just to seek an audience with their bosses. In others the presentation of a suitable gift is a key part of the process of greasing the wheels and ultimately sealing the deal.

The situation becomes even more complex when it comes to the presentation of the gift. Should it be handed over in a prominent and ceremonial fashion? Or should the exchange be more discreet and subtle?

For many business travelers however, the biggest dilemma is this: When does gift-giving cross the line and become out-and-out bribery?

Rules of the game

The underlining assumption to this frequently asked question is that there should be explicit rules covering and regulating gift and/or favour exchanges when building up and maintaining relationships in business transactions.

This is the norm in countries like Singapore and a belief drummed into many Singaporean executives due to the city-state’s rule-based education and business practices. But there are many countries which have no such clearly defined rules.

Instead such rules are implicit and cannot be coded or written down, because the enactment, explanation and exercise of these rules depends on local circumstances. These include the level of familiarity between the parties involved, the rank of the local partner in the hierarchy, local customs and culture, as well as local laws and political institutions.

One way to start might be with a nominal gift or a business lunch rather than an expensive present or an extravagant banquet.

Furthermore, the local circumstances can be idiosyncratic and specific, especially in large countries such as China, India or Russia, which feature a broad variety of different local cultures and values.

Facing these uncertainties and complexities, it is important to first of all understand that countries which have clear and explicit regulations governing social interactions in business transactions are not necessarily the norm.

Such rules and cultures of corporate governance and transparency often do not exist in many markets, especially those in emerging economies.

Therefore in the case of business travelers, viewing the norms and regulations of their home country as relative rather than the absolute is the first step towards a better understanding of local practices in another country.

Second, a conservative, gradual and risk-averse approach may be the best path to follow in managing these social relationships due to their local and idiosyncratic nature.

One way to start, for example, might be with a nominal gift or a business lunch rather than an expensive present or an extravagant banquet.

Misunderstanding or misuse of these rules can lead to serious consequences, such as legal prosecution or confiscation of investment assets, especially in places where legal and political systems are less transparent and democratic.

With these attitudes plus an open mind, and until we see corporate governance practices gaining a stronger foothold in these countries, we can learn these implicit and tacit rules gradually, and the issue of ‘when does gift-giving become bribery?’ will no longer be a question.

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