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Stuck In The Middle

Evan Osnos's latest Letter from China in the New Yorker (here) describes what he calls the gift-imperative -- the constant cultural pressure to give gifts and accept them in business and professional settings. Our most harrowing encounter with the gift-imperative happened not in China but in Southeast Asia. During the festive season one year, a small flatbed drove up to our place in Singapore, loaded with a huge gift hamper -- about five feet tall and packed with pricey bottles and tins -- brandy, caviar and other treats you might see in the window at Harrods. A few minutes later, however, the truck left, still carrying the hamper.

The gift-giver, it turned out, was an opposing party in a dispute we were working on. We knew he didn't expect any quid pro quo -- he was trying to show that he understood the dispute was not personal. We also knew that our rejecting the gift would cause him to lose face. But accepting it was impossible. The clash of cultures was awkward, damaging, and typical of the problems Western and local employees face every day in Asia.

Evan Osnos is speaking as a reporter in China, but his experience is universal:

The problem comes up all the time: American reporters are trained to avoid hand-outs from the people we?re interviewing. Chinese interviewees are trained to be equally vigilant in extending their hospitality. Thus, when a local propaganda-bureau official insists on taking you out to dinner, you have to fake a trip to the toilet halfway through the entree, just to pay the bill before the official can pay it. I have honed a polite but firm spiel for moments like that: ?It?s company policy, I?m sorry?. I will be fired and pilloried if I accept that, I hope you can understand,? and so on. Over the years, it has been effective for deflecting all manner of swag: leather portfolios, pens, briefcases, watches, digital organizers, etc. . . . Once, I was given a folksy sea-shell-encrusted wall-hanging from a Party official in the seaside city of Haikou. (When something is too personal to give back, it ends up with my Chinese colleagues and friends. A driver I know, who works for a foreign news organization, is so well-attired in freebie t-shirts and baseball hats that he looks like a sponsored athlete.)

If not accepting gifts is difficult in Asia, not giving them is even harder. A lack of generosity embarrasses everyone. But the Foreign Corrupt Practices Act is clear. It prohibits the giving of anything of value to a foreign official for the purpose of obtaining or retaining business. So to be safe, most companies that are serious about compliance ban just about all overseas gift-giving to both public and private parties.

That fix sounds easy enough. And at the corporate level it works fine. But on a personal level the collision of the gift-imperative with the compliance requirement is one of the most complex and difficult by-products of the FCPA. Expat and local employees are forced to make choices every day that aren't clear or easy, no matter what the law and their company policies might say. How do we know? There are a string of enforcement actions and ongoing investigations to prove it.
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Full post as published by The FCPA Blog on September 24, 2009 (boomark / email).