Corporate hospitality is a useful tool but are you overly hospitable?

One of the major talking points around the new Bribery Act (which came into force on 1 July this year) is where the dividing line between standard corporate hospitality and bribery actually lies. 

The Act itself states that hospitality which provides “an advantage to another person “and which is “offered or given with the intention of inducing the person to perform a relevant function improperly or in the knowledge of acceptance of the advantage would in itself be improper performance” will constitute an illegal act.  This very broad and somewhat convoluted statement has produced much comment. Thankfully recent guidance from the Serious Fraud Office has provided some welcome clarification.

The SFO has stated that, in assessing whether corporate hospitality amounts to a bribe, it will look at five factors. 

• Whether there is evidence of a clear policy within the company regarding gifts and hospitality.

• Whether the actual hospitality itself was “within the confines” of the company’s policy and, if outside that policy, whether permission had been sought from a high level within the company.

• Whether the cost of the hospitality is proportionate when considered against the recipient and whether it was recorded by the company.

• What additional elements are provided together with the hospitality (examples may include the covering of travel expenses or payment for accommodation).

• The relationship of the timing between the hospitality and any potential business arrangements (this will be particularly pertinent where there is a competitive tender, or similar situation.

From this guidance, companies can take away the key message which is that corporate hospitality in itself will not be treated as suspicious but that they should have a clear policy, stick to that policy and, where there is any doubt, seek advice before the hospitality is offered.

PS Download our succinct guide to the Bribery Act with further information on how it could affect you and your business. 

COMMERCIAL CONTRACTS DEPARTMENT

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David Miller
Partner & head of commercial
david.miller@flintbishop.co.uk
DD: + 44 (0)1332 226 466

Carl Weston
Head of marketing
carl.weston@flintbishop.co.uk
DD: + 44 (0)1332 226 163