In light of the Bribery Act 2010, it is important for businesses to determine whether business expenditure is legitimate business expense, or may be regarded by the SFO as bribery. It is also important for a business to determine what steps it may take to ensure that gifts and hospitality expenditure is legitimate.
The Act has raised concerns as to whether the giving of corporate hospitality, gifts and expenses could amount to a criminal offence. The Bribery Act contains no statutory defence.
The offences included in the Act relating to hospitality, gifts and expenses include:
Section 1: Offences relating to bribing another person.
Section 2: Offences relating to being bribed.
Section 6: Offence of bribing a foreign public official.
Examples of expenses and hospitality incurred during the course of business include travel and overnight accommodation, business lunches, celebrations, corporate hospitality and gifts. It is important to identify when such expenses and hospitality may be considered excessive or lavish and/ or not incurred during the course of business and therefore amount to a bribe for the purposes of the Act. You may wish to take guidance from your corporate solicitor on this point.
It is an offence for a commercial organisation to fail to prevent a person associated with it from bribing another (section 7(1), Bribery Act). The organisation has a defence if it can demonstrate it had adequate procedures in place to prevent bribery (section 7(2)).
In relation to this, the Ministry of Justice is required to provide guidance on adequate procedures that commercial organisations can put in place to prevent bribery and which can be found on its website titled: Guidance about procedures which relevant commercial organisations can put in place to prevent persons associated with them from bribing (section 9 of the Bribery Act 2010).
It is important for businesses to ensure their hospitality and promotional expenditure is legitimate. There seem to be four principles that businesses should communicate to their staff when deciding to give or accept hospitality:
1. Intention. Is the intention behind the gift or hospitality in order to influence the recipient to perform his or her function improperly? If so then it might be construed as illegitimate.
2. Timing. What is the timing of the gift or hospitality? A visit to an event with expenses paid, may be construed as perfectly reasonable after a contract has been awarded, but less so while a contract is still under negotiation.
3. Transparency. Is the gift or hospitality hidden or open, and does the company require its employees to declare and record any gifts received and provided?
4. The self-awareness. Companies and senior managers should advise their employees to consider how a gift or hospitality might look if it became public. This is a useful test of the "reasonable man" issue a jury may be asked to consider.
Summerfield Browne Solicitors have offices in London, Birmingham, Oxford, Cambridge, Northampton and Market Harborough, Leicester.
