Bribery Act & Proceeds of Crime, Corporate hospitality - Written by on Monday, February 20, 2012 15:46 - 0 Comments

The SFO’s view on corporate hospitality

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Yesterday we looked at the corporate gift.  Its twin is corporate hospitality.

The issue of hospitality has created headlines in the UK and has generated column inches which have even included scare stories along the lines that corporate golf days would be outlawed.

This was never true.  Thankfully common sense prevailed.

However, interest in corporate hospitality continues unabated (it is one of the most frequently asked questions).

Last summer the SFO issued additional guidance.  We published it here and it is very sensible stuff – if you are not already familiar with it then you should take a look.

However, the issue remains a popular topic and when in China recently the Director of the SFO took the opportunity to speak on the subject.

Against a back drop of a country where many of those with whom a business would deal would likely be considered ‘Foreign Public Officials’ the comments can be considered applicable in the context of corporate hospitality in the context of ‘Foreign Public Officials’.  The SFO Director said:

“There has been a great deal of discussion in the UK about the level of hospitality that can be offered. Some said that all business hospitality would be an offence under the Bribery Act.  The UK Government has made it clear that this is not right.  Business entertaining and hospitality is very important.  It is an essential part of developing the relationships on which business depends.  Business people will know that entertaining, outside formal meetings, is what is needed in order to be able to get to know potential business partners and to work out whether you trust them enough to do business with them.  This is done through hospitality.

There are of course limits to this and in my view businesses are very well aware of these limits.  For example taking possible business partners out for a meal or having regular meals with current business partners is perfectly natural and is of no concern to the authorities.  However if you were to add to the meal the opportunity for the individuals to have a stay at your private island for a month with their family and with all expenses paid, all the business people I speak to know that this is simply not acceptable.”

Of course the examples given range from the fairly normal (meals) to the extreme (the week holiday on  a private island). There is a massive spread in between.

We have heard complaints about the use of extreme examples.

However, business should take comfort from this and remind itself of the guidelines issued by the SFO last summer.  It seems to us that there is a sensible degree of latitude for business within the guidelines issued.

Indeed, we sometimes see policies and procedures which go overboard in their interpretation of the Bribery Act and prohibit activities which offend sensibilities in overseas jurisidictions and common sense in this one.

Rather than complain about the lack of prescriptive guidelines businesses should be thankful there remains a large degree of subjectivity when it comes to creating an effective anti-bribery policy and use the flexibility sensibly.


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