‘’Tis the season to be merry’ or so the carol goes but as Christmas approaches together with all of the associated opportunities for client entertaining, businesses are being told to beware of the anti-bribery legislation lurking over the horizon.
Lucy Cook, Sage Legal TeamThe Bribery Act
The Bribery Act, expected to be introduced in April 2011, is an attempt to bring England’s anti-corruption laws up to date. One of the offences to be introduced by the Act is ‘promising or offering a financial or other advantage intending the advantage to either induce another person to perform improperly a ‘relevant function or activity’ or to reward a person for doing so’. Potentially, the laying on of extravagant hospitality by a company to prospective (or, in some case, existing) clients in the hope of new orders or the like could lead to prosecution.
Scrooge’s delight?
No doubt to the delight of Scrooge’s followers, some commentators are suggesting that the new Act will chime the death knell for corporate hospitality. However, looking at the Act this seems to be at best, an exaggeration and at worst, scaremongering (particularly, when coupled with details of the fairly draconian penalties for breaching the Act).
Keep it reasonable and proportionate
Scaremongering aside, so long as any hospitality is ‘reasonable and proportionate’ then companies have nothing to fear from the new Act vis-à-vis their entertaining plans for the festive season. Government guidance on the Act is expected to be published early in the New Year and it is hoped that clear guidelines on what constitutes ‘reasonable and proportionate’ hospitality will be included in the guidance.
The CBI recently called upon the Government to ‘put “beyond doubt” that bona fide corporate hospitality will not fall foul of the Bribery Act’ . There is however no certainty that such guidelines will be forthcoming given the views expressed by the Government Spokesman for the Ministry of Justice who stated that ‘it is sufficient to rely on prosecutors to differentiate between legitimate and illegitimate corporate hospitality’ (letter to the House of Lords 14 January 2010). It is difficult to reconcile such a view with the general principle that laws should be fair and transparent.
Moderation and transparency
Putting legal arguments aside, given the current economic climate and the associated general drive towards moderation and transparency in business, it is more likely that invitations to client hospitality events will feature local go-karting venues rather than trips to the Monaco grand prix and so are likely to fall within the ambit of what is ‘reasonable and proportionate’.
Businesses would be well-advised to consider the timing of any hospitality and to recognise that it may not be appropriate to invite representatives of businesses, which are involved in conversations or negotiations around new contracts or renewals of existing contracts, to any extravagant events.
It goes without saying that when making hospitality plans involving clients, businesses would be wise to take into account the circumstances, wishes and any relevant policies of the client business. A business which has had a tough year might have concerns about the impression which could be created by its senior people attending particularly lavish events. Depending on the client business, it may even be worth speaking to client organisations about how they support their chosen charities to see whether there are any opportunities to work together over the festive season to make Christmas better for those less fortunate.
So, the good news is no need to cancel Christmas just yet! And a final word (or two) from Scrooge: ‘Bah, Humbug!’.
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