The UK Bribery Act was implemented nearly eight years ago, but no case law exists to offer organizations an interpretation of corporate hospitality rules. The sole source of guidance to date has been from the Ministry of Justice in 2011.
That guidance states “combatting the risks of bribery is largely about common sense, not burdensome procedures” and the Act is not intended “to prohibit reasonable and proportionate hospitality.” It goes on to say prosecutors need to demonstrate a clear connection between a benefit provided and the intention of offering party to bring about improper performance.
It sounds straight forward. However, the House of Lords Select Committee recently identified several practical issues with the guidance and corporate hospitality overall.
First, conducting business across different cultures often poses challenges. UK law may well damage a business relationship within a geography and culture where lavish gifts are commonplace.
Second, certain industries are unsure as to what is required of them. Many in the construction industry now view “common courtesy, such as refreshments at meetings or business lunches… as a possible bribe or way to influence a decision,” according to the Committee. This would not likely constitute bribery under the Act.
Third, FCA-regulated firms are expected to meet a different standard. The FCA states “sporting and social events … did not appear capable of enhancing the quality of service to clients as they were either not conducive to business discussions or the discussions could better take place without these activities.” But the guidance states this is unlikely to be a violation.
The interpretation of the Act remains subjective, both regarding the organization and the sector in which it operates. But the underlying principle must remain unchanged. A proactive and common-sense approach to corporate hospitality compliance must be taken. And intention is key.
An article by JD Supra offers 5 questions regarding gifts and entertainment your firm should be asking as part of its corporate hospitality compliance program.