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CORPORATE GIFTS: APPRECIATION OR CORRUPTION?

​Definitions

The Cambridge International Dictionary of English defines gifts as "something which is given: a present". The Longman Dictionary of Contemporary of English also defines gift to be "something that you give someone on a special occasion or to thank him". A gift therefore involves two parties namely the giver and the receiver. 

Religion and gifts 

Gift giving (referred to in this article as gifting) is encouraged by various religions. Among Christians, God gave Jesus Christ as a gift to the world. The three wise men gave gifts to Jesus Christ when he was born. The Bible teaches that it is more blessed to give than to receive. Islam encourages almsgiving. It is common on Fridays to see many Moslems giving cash gifts to the needy in the society.

Culture and gifts

Cultural practices confirm gifting as widespread practice. When visiting a chief in his palace, custom demands that the visitor should present the chief with a gift. During festivals, be it traditional or religious, gifts are exchanged among relatives and friends. On special occasions, such as birth or marriage, people give gifts to their friends.

Gifts among nations

Nations exchange gifts. Ghana has received several gifts from many developed nations. In the recent hurricane that hit the gulf coast of the United States, Ghana donated money to the victims. Many countries donated gift items to the victims of Tsunami in Indonesia; Pakistan has also received gifts as a result of the recent earthquake that hit the country.

Inter-company gifts 

Companies give gifts to one another. A multi-national company may donate furniture to a Non Governmental Organisation (NGO) as their contribution to the operations of the NGO. Many Ghanaian companies have given various gift items to National Disaster Management Organization (NADMO) to support disaster victims.

Tax Law and gift 

The Tax Laws make provision for the payment of tax on gift items. Gifting under the scenarios enumerated above does not pose problem to the society. Many people are comfortable with the practice.

Gifts to public officers

Gifts to public officers pose much problem to the society and have raised a lot of concern among many people within the society. Even though the essence of gift is to appreciate the effort or service provided by a public officer, this has been abused over time by public officers in public organizations. When Dr. K.A Busia was the Prime Minister, it was common to read the following inscriptions on notice boards of public organisations: "don't accept gifts because they corrupt". Gifts to public officers may be classified as follows:

  • Gifts from outside sources such as contractor or supplier
  • Gifts among employees 
  • Gifts from employer to employee(s)

Gifts from outside sources

By far, this has been subject to much abuse. Committees of Enquiry have confirmed such abuse. Newspaper reports continue to give an ongoing account of this malpractice. Suppliers/contractors are known to give gifts to public officers. The gifts are in various forms such as: 

  • Cash
  • donation of cars to public officers and sometimes their spouses
  • land (for farming, residential purposes etc.)
  • building materials such as blocks, stones, wood products 
  • livestock (sheep, cows etc.)
  • poultry (fowls, ducks, etc)
  • buildings (wholly or partly financed)
  • tickets to spend vacation abroad 
  • paying courtesy calls at the invitation of contractors/suppliers 
  • underwriting of funeral expenses
  • payment of tuition fees for children studying abroad
  • invitation to lunch, dinner, etc. fully paid for by contractor 
  • food items

The values of these gifts are usually very high and one wonders what services these public officers provided to merit them. 

These gifts influence public officers. The officers lose their integrity and compromise their position on many issues. They are always in a conflict of interest. 

Underwriting of funeral expenses 

Public officers invite contractors/suppliers to attend funerals of bereaved relatives. Such contractors normally announce their presence at the funeral and are given VIP reception. They are expected to give handsome donations to the public officer. The amount is announced to the hearing of the mourners.

If the dead person has two or more children in top positions, then sometimes, the donations are enough to meet the funeral expenses of the family.

Under such circumstances, it is literally said, "the dead person has buried himself/herself". 

Payment of tuition fees of children studying abroad 

Newspaper reports from Committees of Enquiry have informed civil society of the fact that friends of public officers give them much assistance. Such friends are able to pay for the tuition fees of public officers' children studying abroad. 

Tuition fees of overseas universities are quite high and therefore those friends must be philanthropists or very rich people. 

The private sector and gifting

Within the private sector, gifts are budgeted for and treated as expense in the books of account. Gifts may take several names such as: 

  • Protocol
  • Promotion expense 
  • Honorarium
  • Miscellaneous expense
  • General expense 
  • Public Relations 

A private sector company officially or formally influences a public officer by giving him gifts. The gift is therefore from a private company to a public officer. The public officer's company has nothing to do with the gift and does not benefit from it. 

The public sector and gifting 

Currently, gifting has extended to dealings between one public sector Company and another.

For example, a subvented organisation may give gifts to officers of the Ministry of Finance and Economic Planning and the Controller and Accountant-General's Department. The gifts are meant to show appreciation for processing applications for release of funds to meet operational expenses of the subvented organisation. Such public sector companies also treat the value of the gifts as a charge against profit.

  • Gifting therefore results in:
  • Declaration of lower profits and lower payment of taxes and/or dividends 

Higher cost of goods After every transaction, public officers expect to receive gifts. There is the notion that if the gift items are received after the performance of the service, then it must be seen as appreciation and not corruption. The notion is wrong. 

Gifts among employees 

Among employees, gifting has become a standard practice. The trend has taken an alarming proportion and must be discouraged. Branch officers submitting returns to head office usually go with gifts of food items, livestock, poultry, etc. This is generally referred to as "bush allowance". The gifts are meant to show appreciation to their colleagues at the head office who performed some service for the branch office. The service may be: 

  • Processing of imprest for release of funds 
  • Signing of promotion letter

Within head office for example, staff of one department must give gifts to their counterparts in another department when a service is performed for the staff of the former department. The internal auditor whose out-of-station allowance is paid must give gifts to the accountant and cashier who processed the claim. When employees refuse to show appreciation for services performed, such officers are said to have Plaster of Paris (POP) cast around their hands. In other words, they are stingy. 

Employer-employee gifting

Employers give gifts to their employees. The gifts come in various forms such as: 

  • Cash 
  • Television 
  • Sewing machine, etc. 

Employers may give gifts to employees for various reasons such as:

  • Long service 
  • Hard work 
  • Exceeding target
  • Appreciation for loyalty

Employer-employee gifting is not a problem. 

Recommendations 

Gifting as a practice has become inimical and must be nibbed in the bud. The following recommendations are made to address the problem. 

Review of salary levels

Salary levels in the public sector are low. Top public officers sign contracts worth millions of cedis for contractors/suppliers. Regrettably, many of these officers do not earn more than GH¢ 2,000 a month. If salary levels are addressed adequately, public officers may stop budgeting for gifts as part of their remuneration. 

Attitudinal change

Many people are lukewarm as far as gifting is concerned. People must be educated to understand the harmful effects of gifting. Those who benefit from gifting are few but the harmful effect is felt by all sectors of the economy. 

Code of Ethics 

Comprehensive Code of Ethics (Code) must be prepared for public officers. Violation of the Code must lead to the officer being sanctioned. Any Code must consider the following factors, which are in line with best practice: 

Gifts from outside sources

As a general rule, public officers must not accept gifts from outside sources. It has been established that continual gifting leads to preferential treatment of those contractors who give. Sometimes public officers pass on confidential data to such contractors. Occasionally, they give them information that will enable the contractors to win contracts. Thus food items, immovable property, cash, clothing, etc. should not be accepted by public officers. Exception to the general rule may be gift items during a special occasion such as Christmas. The gift item should be limited to: 

  • Christmas card 
  • Calendar
  • Pen 
  • Diary Miscellaneous items of low value (e.g. not exceeding GH¢ 50). 

Invitation to lunch, dinner 

Public officers should not accept invitation to dinner or lunch paid for by contractor/supplier. An exception to the general rule will be: Where the public officer will be paying for the cost of meals and claim a refund from his employers Where the invitation has been extended to many other people and is in commemoration of a special event or occasion (e.g. trade fair). 

Invitation to travel abroad 

Pubic officers should not accept invitation to travel abroad, if the travelling costs are to be borne by the contractor/supplier. If it becomes necessary for a public officer to travel abroad to meet a contractor for business purpose, the travelling costs should be borne by the employer. If a public officer undertakes a private visit such as on vacation period and will visit a country where a contractor/supplier resides, he must refrain himself from contacting him. If the public officer must contact the contractor for just cause, then prior approval must be sought from higher authority before he embarks on the journey.

Payment of tuition fees, grant of scholarship 

Pubic officers should not accept an offer for the payment of tuition fees or grant of scholarship for their wards or relatives. An exception may be: Where the ward/relative has gained scholarship through competition and the normal business of the contractor includes granting of scholarships

Gifts among employees

As a general rule, persons earning higher salary should not accept gifts from those earning lower salary. A supervisor should therefore not accept gift items from a subordinate. The following exceptions can be made:

  • A gift for a major life event such as a wedding, illness, naming ceremony of a baby, retirement or resignation of the supervisor. 
  • A gift for a widely attended event as in say the subordinate officer inviting people to honour lunch appointment where gifts are distributed as Homowo festival 
  • When food and refreshments are served in the office, such as on an employee's birthday
  • On occasions where gifts are exchanged (e.g. Christmas)

As a general rule, a supervisor can give gifts to a subordinate. The subordinate can accept the gifts provided there are no strings attached.

Linkages

Code of Ethics for public officers must be linked with other sectors for a holistic approach to be adopted. If the pubic officer is discouraged from accepting gifts but the General Secretary of a political party can accept gifts for the party, then the Code will not be effective. Leaders must set good example and politicians must show goodwill to see to the implementation of any Code that is promulgated.

Conclusion

Gifting is not free and is therefore very costly. Public officers must abstain from all appearances of corrupt practices, including gifting. 

Corruption is endemic within the society. If Ghanaians will undergo behavioral reform, much of corrupt practices will be eliminated in no time. In this case, no donor funds will be needed.

Gifts may be offered in the spirit of building goodwill but public officers must note that contractors/suppliers give gifts in order to build a "sense of obligation" in the recipient. 

Companies must have policies on gifts to take pressure off their employees. Without company policy, employees must learn to decline favours and return gifts. An employee can say to the contractor, 

"Thank you, my personal policy does not permit me to accept your gift". 

Justice Awuku-Sao 

Chief Executive Officer

Institute of Directors – Ghana Accra



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Saturday, 16 December 2017

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The Institute of Directors-Ghana is an Institution that has its focus on Corporate Governance training.

The Institute offers the following range of professional services.

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