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       PRESS RELEASE

Are those World Cup tickets for clients a gift or a bribe?

7 June 2010

World Cup tickets are the most sought-after gift in South Africa at present but for the corporates that give them there is a thin line between giving a gift and a bribe.

“Most tickets being bought at great cost by companies are not for the purposes of entertaining their own employees. These sought-after slips of paper are being purchased as gifts for valued clients – something of worth given without any expectation of return perhaps, a gesture of thanks for a cordial working relationship. But it can pose corporate governance challenges,” Liza van Wyk, CEO of business training organisation, AstroTech (www.astrotech.co.za) says.

“By far the majority of the tickets given as gifts will be a normal part of corporate giving to esteemed clients. But while a gift is given without expectation, a bribe is the same thing given in the hope of currying favour for purposes of future influence or benefit.

“Although senior employees and government officials may already be invited to the 2010 FIFA World Cup™ or be in a position to buy tickets themselves, it’s what those lower down in the organisation are doing - or being tempted to do - that should be considered. But for anyone at any rank a ticket or two to the final is a rare and highly valued prize, as an example.

“Because it is practically impossible to figure out the expectation of the giver, it’s wise for both public and private sector employees to adhere to corporate governance or parliamentary rules that restrict gifts. These vary from disallowing gifts over a certain amount to requiring simply that they be reported,” Van Wyk said.

Some years ago, when faced with allegations of widespread corruption and kick-backs, Siemens AG famously started disallowing any type of behaviour that could facilitate what was then an industry-wide wink-and-nod culture. For example, sales representatives were no longer allowed to go golfing with doctors they hoped to do business with even if competitors were doing the same thing.

Says van Wyk: “Companies know they have to comply with the King 3 report as well as general company law, but they are questioning what corporate governance entails and how it is implemented practically.”

Van Wyk said AstroTech’s corporate governance courses were consistently full, “the rules have become more complex over time, they now even cover environmental responsibility, but gift giving remains one of the trickiest areas for corporates to negotiate. Each organisation needs to decide for itself exactly where the line will be drawn.” Corporate governance also includes aspects like broadbased black-economic empowerment, staff training and development, worker health and safety statistics, HIV/AIDS prevention plans, air and water pollution and energy and water consumption.

“It may well be true that a ticket to the game or bottle of wine will not influence a trusted employee’s future decision regarding business but many organisations will not allow employees to accept any gift, not even a calendar.

“Many gifts with the company name on it are clear marketing tools. But cash or money transfers can never be seen as a legitimate corporate gift nor cars, house loans or many other high-value items – and some World Cup tickets fall into that league,” Van Wyk warned.

Van Wyk said it was important for businesses and government to stress during this time that, “ethics are important. Employees must report gifts to their supervisors. Any gift from someone wanting to do business is intended to exert an influence. And even if the gestures don’t succeed in swinging the vote or securing business, accepting them can give the appearance of ‘being on the take’, which undermines confidence.

“That is why it’s so important right now for companies – and government – to review their gift policies, educate employees regarding them and commit to adhering to them. Government has strict rules on gifts to its employees. In the private sector it may be common practice to shower top clients with extravagant gifts, but companies who try to reward government officials should realise they’re putting them in the difficult position of having to refuse the gesture – or if charges are ever brought against that employee, the company could find itself having to explain before a court the intent of that gift and that alone can cause significant reputational damage. Governance and ethics cannot be separated.

“An organisation’s ethics are the established values and principles it uses to inform and conduct its activities. These describe the moral and ethical climate within which the organisation wishes to operate. In the words of Roy Disney: “It’s not hard to make decisions when you know what your values are.” “

Overall, the essence of corporate governance attempts to achieve balance. This is the balance between social and economic, individual and communal goals, as well as the often conflicting interests of individuals, corporations and society. “As simple as these concepts sound, there needs to ongoing education on what it means to be a good corporate citizen.”

In South Africa, King 3 covers business best practice, including corporate citizenship, audit committees, risk management, internal audits, integrated sustainability reporting and disclosure as well as compliance with laws.

 

OR FURTHER INFORMATION CONTACT:

LIZA VAN WYK, CEO ASTRO TECH 011 582 3200 cell: 082 466 8975 or liza@astrotech.co.za www.astrotech.co.za

Issued by CSC (Pty) Limited 011-646 7637 or 082 495 8716 mediaonline@global.co.za www.charlenesmith.net