I’ve got a great purchasing department. There are specialists in commodities, equipment, engineered products, and even someone who buys all our office and building supplies for our three locations. Recently, one of the department members was bragging about the new set of golf clubs she won at a vendor’s golf outing, and it got me thinking about the potential for kickbacks or extravagant gifts and how that could create problems, both internally and with some of our customers. We probably should have had some sort of policy years ago, but I’ve never seen a problem, at least so far. What should I be thinking about?
First, I wouldn’t limit my concern to the buying side. You can have bigger problems on the sales side, particularly if you run afoul of a customer’s purchasing policies. If you’re selling to the government, there are gift giving activities that can not only disqualify you from bidding for work but can land you in the “big house.” If you’re selling overseas, “gifts” to foreign officials can violate the Foreign Corrupt Practices Act and the laws of your host country. There are tax issues as well, such as the deductibility of gifts or the declaration of them as income. The IRS doesn’t fool around.
In addition to looking at the legal issues such as taxes and bribery laws, you should examine your customers’ policies. Many companies place a dollar limit on meals and restrict employees from accepting anything more than a key chain or coffee cup with the vendor’s logo. A customer’s employee who overlooks these policies can be ﬁ red and get you off the vendor list. In an age where almost every action has the potential to be exposed, the era of the buyer’s trunk quietly getting loaded with booze and food at the holidays is waning. Obviously, a simple solution beyond reproach is to ban gift giving and gift getting. This however leaves a grey area, such as who pays for lunch or whether to accept an offer to use the vendor’s box seats for the playoffs. It also denies the reality that business acquaintances occasionally develop into real friendships, where gift giving and other favors are normal parts of friendship.