What is and what is not allowed in corporate gifts and hospitality? What is the difference between an innocent gift and a potential bribe? Stuart Chamberlain, Croner-i author and senior employment law consultant, explains.
Bribery is generally described as giving someone financial or other advantages to encourage that person to perform their functions or activities improperly or to reward that person for doing so.
The Bribery Act 2010
The Bribery Act 2010 came into force in July 2011 and is enforced by the Serious Fraud Office (SFO). Under this legislation, an organisation may be liable for failing to prevent bribery. However, an employer will have a full defence to such a charge if it can show that it had adequate procedures in place to prevent bribery.
The Government has produced guidance for employers on the 2010 Act — The Bribery Act 2010: Guidance and The Bribery Act 2010: Quick Start Guide, both published by the Ministry of Justice. Reassuringly, this guidance states that it does not intend that genuine hospitality or similar business expenditure that is “reasonable and proportionate” should be caught by the Bribery Act. It recognises that bona fide hospitality and or promotion or other legitimate business expenditure is an established and important part of doing business. The sort of bribery that the SFO is liable to investigate is not tickets to Wimbledon or Ascot or bottles of champagne at Christmas. Corporate hospitality and making gifts are not criminalised by the Act
“Reasonable and proportionate”
The 2010 Act identifies key factors that will help in deciding whether the gift is “reasonable and proportionate”:
Intention — for corporate hospitality to be an offence, there must be a direct link between the corporate hospitality and an intention for that hospitality to induce improper conduct.
Value — there is no upper financial limit but the more lavish the hospitality or expenditure, the greater the inference that it is intended to encourage or reward improper performance.
Timing — gifts given other than at Christmas — such as during a tendering process or in the middle of a dispute — should ring alarm bells.
Another factor will be whether the hospitality or expenditure is clearly connected with the legitimate business activity or whether it was concealed.
The Government guidance emphasises that payments for flights and hotel accommodation for legitimate business reasons, and invitations to foreign officials or clients to attend sports events designed to cement relations are unlikely to raise the inference of an intention to induce improper performance. The gift of a good bottle of red and other modest gifts at Christmas, therefore, are not likely to contravene the Bribery Act and attract the attention of the SFO.
Nevertheless, all employers should familiarise themselves with this guidance and develop an anti-bribery policy from the principles set out in it. Employers should ensure that all staff, and particularly line managers, understand the policy, and the consequences of not following it.
The Government guidance also stresses that a small or medium-sized business which faces minimal bribery risks will require relatively minimal procedures to mitigate those risks.
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Last reviewed 28 November 2019