5 October 2017
UK Corporate Hospitality & The Bribery Act
The Bribery Act is an act of parliament that was introduced into law in 2011. It has been described as “the toughest anti-corruption legislation in the world” and covers general bribery offences which include promises of a “financial or other advantage” to someone who incorrectly performs a “relevant function or activity”. It is both illegal to offer and accept bribes of this nature in accordance with this act.
A lot has been made of this act on how it relates to corporate hospitality. As the act itself is quite vague, one could interpret that offering your clients a corporate hospitality place at an event of your choosing to be in violation of this law. At the time the act was being drafted, many hospitality agencies feared it would be the end of their industry. However, the then Secretary of State for Justice Kenneth Clarke eased industry operator concerns by clarifying that building relationships or otherwise taking part in regular client management/rapport activities was not against the law and that bringing clients to “events like Wimbledon, Twickenham or the Grand Prix are reasonable hospitalities at which to meet, network and improve relationships with customers”. It is clear that the intention of this act is to not prevent business from engaging in the act of entertaining clients with corporate hospitality, but rather to avoid offering obscene gifts that could be interpreted as incentives to individuals that exceed regular entertaining purposes. For example, offering someone a £100,000 Aston Martin gift with the implication that your company will do business with them would be in contravene of this law (performing “improperly”). Contrastingly, bringing your clients to a corporate hospitality facility at Cheltenham or for a Chelsea game at Stamford Bridge is not!
In the guidance document provided by the government, they give the example of company “F”. Although in this example, it refers to foreign officials, they go on to list 3 points that are especially relevant to this corporate hospitality and the bribery act;
“F could consider any or a combination of the following:
• That any hospitality should reflect a desire to cement good relations and show appreciation, and that promotional expenditure should seek to improve the image of F as a commercial organisation, to better present its products or services, or establish cordial relations
• That the recipient should not be given the impression that they are under an obligation to confer any business advantage or that the recipient’s independence will be affected
• For expenditure over certain limits, approval by an appropriately senior level of management may be a relevant consideration”
In our years of navigating the hospitality market, we have seen this act applicable particularly in the financial sector, where organisations will set their own company guidelines in order to be airtight against the threat of being in contempt of the Bribery Act, as well as a result of the financial crash of 2008 which prompted companies to get their house in order to curb excessive spend on jollies to improve PR. These include upper thresholds on spending and keeping a detailed record of accounts that relate to their expenses from entertaining for transparency purposes.
The law itself has been enforced quite sparingly up until 2016, where we saw an increase of its implementation by the SFO (Serious Fraud Office), according to Burges Salmon – a UK based law firm, who also predict an increase in 2017 and the years that follow.
Ultimately, the key for companies who utilise corporate hospitality as part of their regularly entertaining is to comply with the law via a common sense approach. Corporate hospitality venues are constantly expanding and improving all the time. A spend level from £200-£1500 and beyond is commonplace and won’t be subject to law. Sensible spend that isn’t focused on 1 person being entertained regularly to an excessive degree (eg. to the value of £1500 12 times a year) is perfectly acceptable.