Bribery Act & Proceeds of Crime - Written by on Wednesday, July 20, 2011 0:40 - 1 Comment

SPIFFING: The Bribery Act & incentive payments

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Speaking recently, the Director of the SFO spoke about incentive payments of relatively modest amounts to employees of other companies who are involved in placing their products.

We have written about these before. It’s a popular topic.

These are sometimes referred to as SPIFFS.  This is an acronym for a variety of meanings though the one we prefer is Special Payment Incentive for Fast Sales.

They can be used by manufacturers looking to boost the sales of their products through retailers, offering employees of the retailer(s) special gifts and awards for the sale of their products.

In certain jurisdictions these are frowned upon.  However, in the UK they are not in themselves illegal (assuming that they are not simply disguised bribes) – though they create an environment for potential mischief…

Imagine a manufacturer wishes to sell lots of it own brand BBQ’s (in the BBQ summer we are experiencing soon).  The manufacturer offers employees of a well known DIY chain SPIFFS (for example, vouchers, toasters etc.) if they hit certain targets for sales of the BBQ’s.

Spiffing

So far so good.

However, employees motivated to sell the SPIFFS products could also be motivated to misrepresent the SPIFFS BBQ or simply fail to sell the non SPIFFS BBQ’s in their quest for the SPIFFS.

As a result it has been (and is) our view that if these type of arrangements are used then the most prudent (albeit not mandatory) course of action is for the organisation offering the incentive to ensure that there is transparency and that the employer of the employee receiving the SPIFF is aware of the scheme.  This reduces the risk of some of the problems we have alluded to above.

The Director of the SFO had this to say:

“Our view is that they need to be transparent to all the parties and that the company that is ultimately funding the incentive payments needs to be sure that these are genuine incentive payments going to individuals and are not being used in order to provide a way of making bribes to third parties. We encourage a senior officer of the ultimate paying company to have responsibility for this and to make sure they are content that these payments are going for proper purposes.

We do not have a problem about all of this, although I should add that we have indicated some disquiet when the payments are not actually known to the employer of the individual receiving the payments. This seems to us unsatisfactory for all sorts of reasons and we have encouraged the company to think about this.”

Sensible stuff.

 

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High Tide: From Formula 1 Bribery To Emergency Oil Sales | Formula 1 Motor Sport News
Jul 20, 2011 23:35

[…] payments, or spiffs, under the U.K. Bribery Act. […]

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