– Good morning boss!
– Good afternoon Angeline! How was your day today? What happened in Singapore?
– Buff! I wanted to talk to you Elisa, I am not sure whether this looks ok, let me tell you.
– Go ahead girl
– The CEO in Singapore wants to offer a hong bao
– A what?
– Hong bao, red envelope, do you know about it?
– No, never heard
– It is Chinese culture to offer the employees with a red envelope containing some money for New Year
– It shows appreciation, and it sends a message of good luck. I think this is fine
– So do I
– The problem is that to do this, they are going to send all the money to one of the PA’s personal bank account, for her to take the money in cash from her bank account and bring it to the office to put it in the red envelopes
– Yes, it does not look good, right?
– No, it does not, have not we learned from China? Why do we need to do it this way and complicate it so much?
– I do not know but I approached the Finance Director and he is not very happy with this way either. However, the CEO does not want to change it
– Why not?
– I do not know
– Well, there has to be a reason, and it better be a good one, have you talked to Alex?
– Yes, but he is fine
– How come is he fine with this? It does not look very compliant. In fact, it looks dodgy
– I know, and he knows that as well, but here we do not oppose the CEO, and least of all for small amount of money
– Excellent! Carpe diem then! Now I better understand China! How small is that money?
– Well, it seems they are planning to give some 10 Singapore dollars to each employee and we are some 1,500 employees
– Ok, so that makes a total of 15,000 Singapore dollars that will be sent to the PA’s personal bank account
– How much could the standard full bonus of this PA be?
– Some 15,000 Singapore dollars, I estimate,
– You see girl? We are giving one employee an additional full bonus, and then we expect that this person will take all that money in cash to do what? I do not think this is something so small, it sounds so dodgy that it can be perceived as something illegal, even if this money is fully used on the red envelopes, Caesar’s wife principle should apply
– Caesar’s wife?
– Yes, Caesar’s wife had to be above suspicion, meaning that one has not only to comply with the law, but also to look like one is complying with the law. After China, we should be much more careful.
– So, what do we do? I feel really uncomfortable
– Me too, can you talk to the Finance Director? Maybe he can also join forces with the HR Director
– Yes, I can do that, but what do I tell him? How could this be done?
– Well, the most logical way is for the Finance Director to go to the company bank and retrieve the money, as he has powers on the company bank account. Further, this should be done in the presence of someone from HR. I am assuming that the bank will check thoroughly their credentials before handing the money.
– What about approval for that?
– You are right girl, prior to that, there should be an email, at least, from the CEO to the Finance Director and HR Director approving this payment and describing the way to do it.
– Yes, I feel more comfortable this way
– I am also thinking loudly here, the red envelope should be handed to all employees, so HR has to print an updated list and ensure that each employee gets the red envelope
– And what about an email informing the employees?
– Very good girl. Yes, an email should be sent by the CEO, informing all employees, that they will get a red envelope the following day. With all this, we have evidence of the payment approved by the CEO, the money been retrieved from the company bank by a person with legal powers to do so in presence of HR and another email informing the employees about the red envelope. Any other ideas you can think of?
– The timing
– What about the timing?
– The retrieval of the money from the bank has to be 1-2 days before giving the envelopes.
– Excellent thought! You are right, add it too to the discussion with the Finance Director
– What if the CEO still says no?
– Ask him what he is going to tell the external auditors and the internal auditors when all he is going to have, as evidence, is an amount of money being sent to the PA’s personal bank account.
– Elisa, you know the internal auditors will accept whatever the CEO tells them
– True girl, let me see…look at this link: https://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&cad=rja&uact=8&ved=0ahUKEwjwy7_O8LbOAhWCIMAKHfYcBXIQFggiMAE&url=http%3A%2F%2Fhb.betterregulation.com%2Fexternal%2FGlobal%2520Legal%2520Insights%2520-%2520Bribery%2520and%2520Corruption%25201st%2520Edition%2C%2520Irish%2520chapter.pdf&usg=AFQjCNFB7vgTpB6e72X5jReo6W_dwX1kYg&bvm=bv.129389765,d.d24
– What is it?
– Legal advice on bribery and corruption and how a red envelope payment, or any cash, can be easily perceived to be linked to corruption. Clearly, after China, he does not want to appeal any similar attention
– That’s great Elisa
– Also, check with Legal in Singapore, so they can provide more support
– Well Elisa, you know that Legal approved the suspicious distributor’s structure that was behind the sanctions and exports breach in Myanmar
– You are right girl, forget it, and let’s proceed as just discussed with the Finance Director, if you need me to talk to him, let me know
– I will Elisa, I feel much better after talking to you about this
– Good, I am glad that this has been helpful
The lesson from this real example is that, even a good gesture can be completely undermined and bring a company into trouble, if the way of doing it looks suspicious and dodgy. Since the recent bribery and corruption scandals (e.g.: GSK China, FIFA, etc) companies should pay more attention to cash payments. Doing the right thing in the right way it may take some effort. In this real experience this involved drafting official emails, the Finance Director appointment with the company bank, etc. This effort should be compared to the effort deployed explaining cash payments without much evidence on top of any reputational impact (regardless of whether the cash payment was for valid reasons or not).
Further, the Prevention of Corruption Act in Singapore (PCA) expressly disallows admission of evidence to show that any alleged gratification is customary in any profession or trade. An example of this is the giving of red envelopes. This is not a valid defence per se in a corruption trial.
The last comment is that, to get a final decision on whether the way of doing may look suspicious, just consider how it would look like if it was to appear in a global newspaper and you had to provide an explanation to the media. I am still trying to find ways to explain the sizeable payment to the PA’s personal bank account for her to retrieve the money in cash….