Are Bribes in Business Illegal?

Bribery in business is illegal, just as it is in government and public organizations. A business bribe typically occurs when a company or representative gives money or financial considerations to another person, business or public official to gain favor or to manipulate business decisions of partners, suppliers or buyers. An infamous example of business bribery in the U.S. occurred in the 1980s when 22 Honda executives and officials were found guilty of accepting cash and personal item bribes from dealers in exchange for timely access to the most profitable vehicles.

Bribery is a very gray are in business. A fine line exists between a bribe and a gift. The general rule of thumb is that a simple, no-strings attached gesture is a gift, but something of value given to sway business decisions or the actions of others is a bribe. Part of the gray area in bribery is because there are no specific guidelines on monetary value. In some industries, treating clients to thousands of dollars worth of food and entertainment is common when building rapport. In general, if it is in line with normal practices in your industry, you are OK.

Bribery goes against the basic philosophy of the U.S. free enterprise system, which is to let the best company when in competitive business scenarios. Having the best product, best service, lowest cost or best management are ways you can succeed. Kickbacks, reciprocity and so-called "under the table" money are examples of bribery. Kickbacks include portions of income or revenue shared with people that help you earn it. In real estate, for instance, giving a home buyer a percentage of your commission on a sale to work with you is a kickback. Reciprocity follows the "I'll scratch your back if you scratch mine." Small businesses often trade services or things of value with other companies in their markets. You can't refuse to buy from a business by saying it must buy something from you.

The intent behind a gift or service is key to its acceptance. If you offer a gift or provide entertainment to a potential client and he chooses to go elsewhere, you can't accept the gift back without it appearing to be a bribe. Meals, golf and entertainment are common expenditures used by salespeople and companies to gain business. What makes the bribery issue more complicated is differences in global business practices. In some countries, "under the table" money paid to politicians or public officials to expedite decisions is normal. In fact, an April 2012 Forbes.com article defended these actions by Wal-mart's Mexico division from as far back as 2006 that came to light in early 2012. The U.S. Foreign Corrupt Policies Act guides American businesses on how to act in other countries.

Punishments for bribery vary based on the nature of the activity, federal and state laws and the significance. The Anti-Kickback Act of 1986 places penalties of $5,000 in fines and up to five years in prison on government contractors for giving or accepting bribes. You and your business face both civil and criminal charges if you commit bribery. In the Honda case, two senior executives were ultimately sentenced to federal prison terms in October 1995 for their roles in accepting kickbacks from dealers.