What's the difference between
a bribe and a gratuity? Is it legal to give a gratuity,
such as a tip or thank you gift to a government official? These questions took center stage
in a recent U.S. Supreme Court decision, Snyder v. United States,
where the court held 6 to 3, that while federal law criminalizes bribes
to state and local government officials, federal law does not make it a crime for state and local officials
to accept gratuities for their past acts. The Supreme Court overturned
the federal conviction of a former mayor in Indiana, who had received
a $13,000 gratuity from a trucking company after the company had won city contracts
worth more than a million dollars. According to the Supreme Court,
timing matters. Bribes are typically payments
made or agreed to before an official act in order to influence the public official
with respect to that future official act. Gratuities are typically payments
made to a public official after an official act,
as a reward or token of appreciation. Does this mean it's now legal
to give a government official a token of appreciation
for helping you out, whether in the form of a fruit basket or $13,000 in cash? Not necessarily. While the U.S. Supreme Court has
limited the ability of U.S. federal prosecutors
to bring federal charges for gratuities given to state, local, tribal
and even international officials, it's important to remember
that federal law still makes it a crime to give a federal government official
a gratuity for a prior official act. And many state and local governments
prohibit or heavily regulate gratuities
to state and local officials. As the Supreme Court recognized,
federal, state, and local governments have drawn different lines on
which gratuities and gifts are acceptable and which are not. Different governments
have different ethics rules. So despite the Supreme Court's
recent narrowing of certain federal anti-corruption laws, it's probably not a good idea to relax
your corporate compliance policies. Businesses still need to be careful
not only about quid pro quo bribes to government officials,
but also about giving gratuities, gifts, travel, entertainment
and other things of value that could get caught
in a complex web of laws and regulations. Of course, just as different governments
may draw different lines, different companies
may draw different lines too. For more on this and other compliance
topics, visit ArnoldPorter.com and stay tuned to our
Critical Compliance series.