GIFTS AND HOSPITALITY and the BRIBERY ACT
The Government has made it clear that there is no intention in this legislation to criminalise corporate hospitality or other expenditure which is reasonable and proportionate. It is accepted that this is a recognised and established part of doing business.
But equally it is a risk area, because in some instances it may be perceived that the real purpose behind the expenditure is to influence an individual in order to secure business or a business advantage. In such circumstances a commercial organisation would be at risk under section 7 of the Act.
It is not thought that the Act will engender a plethora of cases based upon unreasonable and disproportionate hospitality. However, if a particular case does fall for consideration, the approach of the SFO will be to consider the following five questions:
- Does the company have a clear issued policy regarding gifts and hospitality?
- Did the scale of the expenditure in question fall within the confines of such policy and if not, had special permission for it been sought at a high level within the organisation?
- Was the expenditure proportionate with regard to the recipient?
- Is there evidence that such expenditure had been recorded by the company?
- Was the recipient entitled to receive the hospitality under the law of the recipient’s country?
The SFO would consider whether, in the light of the answer to these questions, the only reasonable inference was that the expenditure in question was intended as a bribe.
The drawing of such an inference would inevitably be strengthened if, in addition, it were to transpire: that there had been any unjustifiable ‘add-ons’, for example, in relation to travel or accommodation; or, that the expenditure in question could be related in time to some actual or anticipated business with the recipient, particularly in a competitive context.
It should be clear from this that comments suggesting that the Bribery Act has signalled the end of corporate hospitality are entirely misplaced.
Companies simply need to apply good judgment and sound common sense. This, together with a sensible exercise of prosecutorial discretion, are likely to keep to a minimum the number of cases which are brought to court in this area.