During Chinese New Year, it is customary to give and receive “ang pow” or “hong bao” (monetary gifts in red envelopes to signify good luck). Our previous article addressed the issue of whether an employee has a right to expect an “ang pow” from their employer due to this tradition. This article examines the appropriateness of accepting “ang pow” from suppliers.
The Malaysian Industrial Court has generally taken the view that it is inappropriate for employees to receive cash gifts from suppliers because “an employee who receives money from the company’s supplier may become beholden to them and find themselves in a conflict of interest situation”. Further, the receipt of cash gifts from a supplier could be construed as “kickbacks” or bribery, which if proven, would constitute a gross misconduct warranting dismissal. This is especially so if the employee receiving the gift has certain influence over the supplier’s business with his employer (eg: employees in the purchasing department, or employees in senior management).
An employee who receives money, gifts or favours from a supplier in exchange for assisting that supplier to obtain or retain business (or to do anything else that is not in the interest of the employee’s employer) may be committing corruption, given the Malaysian Anti-Corruption Commission Act’s wide definition of “corruption”.
The fact that monetary gifts may be part of custom or tradition does not preclude it being used to disguise illicit payments or bribes. In 2011, the US Security and Exchange Commission was tipped off that Sony Pictures’ contractor in China was using “special influence” to get a film released in China. Investigations uncovered some anomalies such as a significant sum being spent on “red packets”. One source based in China, told Forbes he believed that the phrase “red packets” is used to give cash to anyone and the word is synonymous with bribe.
It is on this basis that many companies now adopt strict “gift policies” which governs what kind of gifts can be given or received by employees, especially during festive seasons. Gift policies may prohibit or restrict the types of gifts, or may include certain thresholds or reporting and approval requirements.
Given the Malaysian culture of gift giving during festive seasons, companies who do not have such written policies in place would be well advised to look into implementing such a policy to promote a culture of transparency and compliance in the workplace. The failure to get this right could be costly: in the investigations mentions above, a member of Sony’s finance team said in 2012 that it had spent $1 million in legal fees in support of the SEC inquiry and that costs per month were around $150,000 per month.
Employees who are offered gifts (especially expensive gifts or cash) from suppliers should also consider the optics of the situation, even if the intentions behind the gift are innocent: the appearance of corruption is sometimes damaging enough on its own.
ABOUT THE AUTHOR. Donovan Cheah is a partner at Donovan & Ho. He is an advocate and solicitor of the High Court of Malaya, and his writings have been featured in publications like The Edge, The Star, the American Chamber of Commerce updates, and Asialaw.