The End of the Champagne Party? Corporate Hospitality and the new UK Bribery Act
What's The Bribery Act got to do with fine wine? Well, some think the latter might entail the former. Should corporate event planners beware?
One advantage of belonging to the Institute of Directors is the London branch's rather useful and sociable expert evenings when top minds on a topic are corralled for a 12-minute address each, then questions. Then wine and canapés, of course. When a recent evening was about The Bribery Act, I was there. Not being a lawyer, but in the business of supplying many law firms (and finance houses) with corporate wine entertainment, I'd heard rather too many mutterings from them to ignore the view that the coming Bribery Act was a threat to corporate entertainment. The panel was certainly expert: Vivian Robinson QC from the Serious Fraud Office, John Burbidge-King of Interchange and Donald Macfarlane COO of LDM Global.
The Act came into force on July 1st. A final set of government guidance to the Act has now been published. The Act will apply to UK and non-UK companies doing business here or with UK companies. The nub of the new advice is: be able to show you had adequate procedures and policies in place to prevent bribery if you want a defence against a charge of bribery. And the guidance lays down six principles for prevention, mostly common sense and boiling down to the need for a company to kit itself out with proper procedures, top commitment, due diligence on its markets and contacts and above all proper risk assessment of all possible 'hot spots' in their business where bribery might arise. The area of facilitation payments to government officials to speed up business or remove bureaucratic obstacles is one such area. Another 'hot spot' talked of in the guidance is corporate hospitality.
So should companies pull in their corporate entertainment horns, particularly when dealing with clients whose business you want or want to keep? There has been a flurry of press speculation implying that corporate hospitality is now at red for danger. Interestingly, the same evening as this IOD briefing, The Evening Standard in London carried a major piece by Chris Blackhurst, City Editor, with the alarmist headline: 'Those Tickets for Wimbledon may land you in jail.'
Well might they? The answer seems to be: almost certainly not, and that was the view of this IOD panel. While even SMEs need to work on their anti-bribery framework, practice, policy, monitoring and training, the normal treating of clients in business is not high risk under the Act. The guidance says 'bona fide hospitality and promotional or other expenditure which seeks to improve the image of a commercial organisation, better to present products and services, or establish cordial relations, is recognised as an established and important part of doing business and it is not the intention of the Act to criminalise such behaviour.' And Justice Secretary Ken Clarke is also on record as saying: 'The guidance makes clear that no one is going to stop businesses getting to know their clients by taking them to events like Wimbledon, Twickenham or the Grand Prix...Reasonable hospitality to meet, network and improve relationships with customers is a normal part of business.'
On June 11th, the Financial Times reported an interview with Vivian Robinson QC which said the following: 'Robinson is keen to downplay what he sees as a rash of "alarmist reporting about gifts and hospitality...This has led a lot of people to think - wrongly - that this is the end of the business lunch, or the box at Lord's. It doesn't mean that at all. The guidance makes clear that the government is not going to penalise proportionate gifts and hospitality -as long as it is proportionate."
So that's all right then. Just make sure that a bribe is not offered or taken at such events or that the event is a condition of major business. Wine barrels have bung holes. Wine tastings do not.
Update - October 2012 - It is now 15 months since the Bribery Act came into force. There has not been a single major prosecution. We would certainly advise compliance with the Act, especially the ability to show due diligence on business procedures has been done in order to have a defence. But it is clear the Bribery Act is a storm in a tea cup. The SFO, reports the Financial Times of 4th October, has taken down its Act guidance on its website and the FT says its disrector David Green says they are' interested only in 'top level corruption' that threatened the stability and reputation of the UK.'
That doesn't sound like your average corporate wine tasting to us.