Sunday 8 December 2019

Kallakis trial shines light on 'freebie' culture in Irish business

THERE are many intriguing aspects to the Kallakis trial which saw AIB fall for the charms of two convicted swindlers.

One aspect that really doesn't get enough discussion in corporate Ireland is the role of freebies.

The Kallakis trial was told that AIB executives who were doing business with Kallakis (pictured below) accepted trips to the 2006 World Cup final in Berlin as well as holidays in Mauritius and in invitation to a birthday party in St Petersburg.

While hospitality is likely to be far less lavish elsewhere in corporate life, there are echoes of this sort of thing for many procurement managers, doctors and, yes, journalists who are all likely to receive unsolicited gifts from companies.

One study in the US calculated that drug companies there spend anything from $8,000 (€6,000) to $15,000 (€11,280) a year on marketing to every doctor in the country.

Back in the real world, we all know that nobody gives "presents" like these unless they want something in return.

Most well-run companies have strict rules on gifts to purchasing managers and their ilk from outside suppliers.

Presents with more than a nominal value are insulting to both parties while also clouding judgement.

Is it any coincidence that the murky past of Kallakis was only uncovered by a German bank that was not on his birthday list?

Now that AIB is more than 99pc state-owned, we must hope that practices have changed.

Civil servants are not allowed to accept presents (although they accept hospitality) and most listed companies have also been trying to stamp out the practice.

The reason for stamping out gifts is simple – they work. Even small ones.

A report called 'You Owe Me', which was published last November by the Centre for Economic Policy Research, showed that even rich people respond to small gifts and the effect seems to be stronger when the gift is paid for by a company rather than the giver.

That's why the Punt won't be accepting gifts next Christmas.

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