Paying for travel and modest entertainment or hospitality for government officials or others can be a legitimate business practice. As with gift giving, the FCPA, the UK Bribery Act 2010 and French Law do not provide explicit monetary thresholds or other criteria of per se acceptable travel, entertainment, and hospitality expenses. Rather, enforcement authorities will consider the totality of the evidence and surrounding circumstances in assessing whether an inference can be drawn that the travel, entertainment, and hospitality was for a corrupt purpose. The value of an expenditure will not be the only consideration. According to enforcement authorities, characteristics of improper travel, entertainment, and hospitality include:
- paying for the travel expenses of a spouse, family member, or friend;
- trips consisting primarily of sightseeing or attendance at concerts, sporting events, or festivals, with little or no business purpose;
- lavish entertainment;
- expenses that deviate significantly from the organization’s policy for its own employees regarding travel, entertainment, and hospitality; and
- keeping incomplete, misleading, or false records relating to the travel, entertainment or hospitality.
An effective ABC compliance program should provide clear guidance regarding acceptable travel, entertainment, and hospitality as well as the organization’s approval procedures. The policy should establish who is responsible for approving such expenses in advance of their being incurred. Companies should make best efforts to pay the expenses directly to the relevant vendor. If a company is reimbursing a government official for travel, entertainment, or hospitality expenses, the company should require complete records documenting the expenses.
In addition, the company should keep written records that properly account for the expense and document the approval process, the type and amount of the travel/entertainment/hospitality provided, and the purpose for the expense (e.g., for a company site visit or a promotional event). The travel, entertainment, or hospitality provided should not deviate from the type of travel, entertainment, or hospitality for which an employee could be reimbursed. Organizations should ensure that the travel, entertainment, and hospitality are in compliance with local laws. If possible, organizations should consider allowing the government entity to select the relevant government officials to attend the relevant event.