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Addressing The dilemma Of Diwali Gifts And Bribes

Organizations should define an appropriate mechanism for timely reporting of any inappropriate practice followed in giving gifts. They should also establish a defined timeline to resolve the matter.

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The celebrations around the festival of lights, Diwali have gone beyond just traditions and revelries. Today, almost every brand intends to capitalize on festive occasions and holidays by epitomizing being the ‘ideal’ gift for family, friends and colleagues. New products are launched, attractive discounts offered and advertising revenue goes off the charts. Buzzwords like ‘Diwali extravaganza’ are ubiquitous. It’s no surprise that the cultural nuances of Diwali and other festivals have slowly turned ostentatious with time. It is no longer about just giving a token of appreciation but is now about customized and often high value gifts (gold coins, international trips or expensive mobile phones), rising digital and ad spends for greater brand recall and recognition.

Culturally, Diwali has been seen as an opportunity to express gratitude to everyone in the business ecosystem - employees, customers, vendors and other stakeholders. Corporate gifting and hospitality has embraced this culture as well (akin to Christmas gifting in the western world). This can however become a cause of concern for corporates operating in a global environment. 

Gifting can be a dilemma for corporates since the ‘motive’ behind it is subjective. For example, is it just good faith? Can it be interpreted as a bribe to influence a decision? Does the gift value depend on the level of the person? Let’s take the example of a FMCG company planning Diwali celebrations and listing gifts for all and sundry. The team narrowed down on gift vouchers from an e-commerce website to all stakeholders. But amidst the process of finalizing and procuring, the company’s compliance department raised it as a red flag. According to them, the activity could be misconstrued as a form of ‘bribe’ to get new business from customers. 

The Indian Government has also taken steps to combat this issue and sought to pass the Prevention of Corruption Act, (POCA) Bill, 2018. The bill makes bribery a punishable offence of up to seven years for both the bribe givers and receivers. 

Gifts and hospitality have always been culturally accepted in emerging markets such as India. However, organizations in India are witnessing a paradigm shift when it comes to giving gifts, particularly during festive times. Here are some key considerations that organizations can take note of to mitigate the sparks of bribery and corrupt activities.

* Internal surveys can be carried out to obtain feedback from employees about their perception toward gifts, the circumstances in which they have been given and manner of reporting for unethical activities

* Organizations should define a strong zero tolerance policy toward bribery, highlight the consequences of the violation and communicate this adherence to employees through various channels (emailers, posters, trainings)

* The gift and hospitality policy should be reviewed or defined in a clear and concise manner. It should incorporate the recent amendments introduced at the central level. Monetary limits can revised based on the results from internal surveys, specifying the type of gifts that are permissible or non-permissible. The updated and final policy should then be communicated to all stakeholders. For example, gifts can be standardized, company branded, of nominal value and sourced by pre-approved or empanelled vendors.

* The authorization matrix for approving gifts should be defined. Organizations should also outlines the criteria for exceptional cases and set up a special and independent team to review and approve these cases.

* Periodic trainings should be conducted for all stakeholders, either led by the organization or external consultants. These trainings should seek to highlight the importance of gifting policies and practices; educate employees on legitimate and non-legitimate gifts

* Agreements or contracts with the requisite approvals should be sought from third parties or vendors for giving gifts. Documentary evidences to support the claims should be sacrosanct.

* All payments for gift should be supported with pre-payment justifications, approvals as per the authorization matrix, proof of payments and list of recipients

* Organizations should define an appropriate mechanism for timely reporting of any inappropriate practice followed in giving gifts. They should also establish a defined timeline to resolve the matter.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

Tags assigned to this article:
festive season Gifting

Arpinder Singh

The author is Partner and Head - India and Emerging Markets, Forensic & Integrity Services, Ernst & Young LLP

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