Many in-house compliance counsel are aware that the ability of private parties to provide gifts and entertainment to public officials can be limited, most commonly through the use of prophylactic gift bans, restrictions and disclosure regimes. These prophylactic laws supplement the various federal and state criminal laws that prohibit providing public officials anything of value in exchange for or because of official action. Most companies have a pre-approval process in place for when an employee seeks to make a gift or provide entertainment to a public official or employee, and corporate counsel responsible for these requests should be aware of the circumstances under which a gift can create criminal liability. Identifying the circumstances, however, can be challenging, as the line where business as usual crosses into criminal conduct can be unclear. This question – when does a gift become a bribe? – is the focus of McDonnell v. United States, the case involving the criminal prosecution of former Virginia Governor Bob McDonnell that was argued before the U.S. Supreme Court in April. And there are lessons here for corporate compliance programs.

The McDonnell prosecution arose out of the relationship that McDonnell and his wife had with Jonnie Williams Sr., the CEO of Star Scientific. Williams provided McDonnell and his wife with over $175,000 in luxury goods, gifts and loans. Williams provided the use of his private jet during the governor’s campaign, took McDonnell’s wife on a $20,000 shopping spree in Manhattan, paid for expenses for the McDonnells’ daughter’s wedding, bought a $6,000 Rolex for the governor and loaned him a Ferrari.

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