Diwali Gifts: Where to draw the line

Exchanging gifts during festivals and celebratory occasions has become a norm in many cultures over time. With the festival of lights just around the corner, ornate boxes of sweets and dry fruits can often be seen delivered across the board. Traditionally, Diwali gifts as a token of goodwill and revelry are accepted by many but what can one do if these gestures become ostentatious with impeccably packed objects such as electronics, mobile phones, jewellery, gift cards and even liquor bottles? When and how would one know to say no?

The custom of giving gifts and entertainment can build and foster business relationships, however, there is a thin line between gifting and bribery. The predicament associated with Diwali gifts is one such area, when unethical practices can be garbed amidst the ‘festive cheer’. Over the last few years, corporate gifting has come under the scanner with boxes getting bigger – actually, figuratively and discreetly. In fact, there are a rising number of cases around the use of company credit cards or e-commerce sites delivering orders directly at the recipient’s address to conceal the trail of gifting. Third party vendors can be used as ‘fronts’ for dubious gifting on behalf of the parent organization; and gifts can even turn out to be paid holidays or high value tickets of sporting events.

Industry sentiments suggest that gift giving is construed ‘necessary’ in many scenarios. As per EY’s Asia-Pacific Fraud Survey 2017, ‘Economic uncertainty or unethical conduct: How should over-burdened compliance functions respond? 35% of respondents in India stated that it is justified to offer personal gifts or services to win and retain business. In a volatile and competitive business environment, gift giving therefore becomes a means to an end with little heed paid to the consequences.

So is your gift in reality just a gift?

In India, regulations under the Prevention of Corruption Act, 1988 and All India Services (Conduct) Rules provide guidance on gifts given to Government officials. The Prevention of Corruption Act, 1988, the primary anti-bribery and anti-corruption legislation prohibits giving gifts or gratifications to a public servant in return for a favour. The All India Services (Conduct) Rules requires Government officials to report gifts exceeding the prescribed monetary limit (INR 5,000). Section 12 of the Act states the act of giving a bribe as a criminal offence of abetment, leading to imprisonment not less than three years. For now, the private sector is not covered under the law.

To read more, click here

Follow @EY_India and track #EYForensic for regular updates

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.