How the Bribery Act might affect marketers

The forthcoming Bribery Act has the potential to affect all marketers using business gifts, particularly corporate hospitality. Jeremy Summers, partner at Russell Jones & Walker, gives the low down

The Bribery Act 2010, when it finally comes into force, will repeal all existing British common law and statutory offences relating to corruption and will bring in four new principle offences:

1. Giving a bribe.

2. Receiving a bribe.

3. Bribing a foreign public official.

4. A corporate offence of failing to prevent bribery.

For the purposes of the Act, a person will have either given or received a bribe if they are found to have acted improperly in the performance of relevant function or activity. This includes any function of a public nature or any business activity.

A person performing an activity covered by the terms of the Act will be expected to perform it in good faith, or impartially or in accordance with a position of trust. Improper performance will therefore be judged on whether an individual does not act in way that a reasonable person would expect in relation to the activity.

What does it mean?

The Act itself does not specifically cover corporate hospitality and gifting. The fear, however, is that its provisions have been drafted so widely that they could potentially catch normal business activities, corporate hospitality and gifting. It is hoped that the long-awaited guidance to be published in advance of the new Act will provide greater clarity on how these aspects will be enforced and so enable businesses to ensure they stay on the right side of the law. The guidance will be available from www.justice.co.uk.

However it is worth recalling that the improper use of hospitality and gifting has always been liable to prosecution if its ulterior motive could be viewed as being corrupt; the Act will not change that position. Having said that, the Act has been drafted in the belief that it will make it easier to prosecute corrupt activity. It will also remove the safety net of companies being able to say that they were unaware of the activities of a particular individual unless they can demonstrate that they had adequate procedures in place to prevent bribery.

The Serious Fraud Office (SFO) has made it plain that it does not envisage paying close attention to regular corporate hospitality and reasonable gifting. Instead, it is likely to concentrate its resources on probing activities which, while advanced under the general banner of corporate hospitality, might in reality have a more sinister intent.

Red flags to watch out for

So how should businesses go about addressing hospitality and gifting under the Bribery Act? Common sense will be the order of the day and the maxim ‘if it doesn’t feel right, it probably isn’t’ is a good starting point. The SFO is likely to look for the presence of ‘red flags’ and businesses should do likewise, e.g:

• Would the hospitality or gift be viewed as excessive?

• Would it be considered normal or typical hospitality or gifting in all the circumstances?

• Is it in fact hospitality – is the host going to be there or are you simply being given ‘a deal sweetener’?

• Could the hospitality or gift be motivated not by a desire to develop or improve a relationship but to secure the award of a specific contract or project?

• Have you been asked not to disclose the hospitality or gift, or has the recipient suggested that he will not disclose it?

• Does the hospitality or gift contravene any policy of either the party giving or receiving it?

All of these questions could well be answered in a way that does not give rise to any further concern. However, if issues do arise and are not addressed, then if an investigation follows it is not difficult to see the hospitality or gift being subject to close scrutiny. 

Practical steps to take 

From a corporate point of view if an individual member of staff (whether at management level or otherwise) becomes involved in hospitality or gifting that is subsequently called into question, then the company may find itself liable for the new corporate offence, and on conviction subject to an unlimited fine. In that instance, the only defence available to a company will be to demonstrate that it had in place adequate procedures to prevent bribery.

In order not to fall foul of this new provision, companies will need to address their compliance systems before the Act comes into force. What systems are required will have to be determined on the scale and nature of the business concerned and certainly there is no one-size-fits-all response possible.

A prudent approach would suggest the need to have some form of anti-corruption policy and gifts and hospitality policy tailored to fit a company. That way when the next ticket to Twickenham or Glyndebourne is offered, an objective decision can be taken that is appropriate to accept, and the fortunate recipient can enjoy the occasion without looking over his or her shoulder.

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