International - Written by on Sunday, February 19, 2012 12:02 - 1 Comment

The SFO’s view on gifts & Foreign Public Officials

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The Director of the Serious Fraud has recently been in China.

It was this visit which sparked the comments we reported yesterday where he discussed the issue of Foreign Public Officials.  In China with so many businesses under state control there is a strong likelihood that you may deal with Foreign Public Officials without realising it.

On the same visit the Director also touched on the issue of gifts and corporate hospitality.

This is another topic which has sparked a generous amount of commentary.

Concerns were raised before the publication of the Bribery Act Ministry of Justice guidance that small gifts to Foreign Public Officials in conjunction with an objective of selling services could technically violate the Act.

Fortunately the Ministry of Justice Guidance dealt with this fairly conclusively.  Indeed those who have studied the guidance carefully will have noticed that the bulk of the examples of corporate hospitality are included in the Section dealing with the Bribery of Foreign Public Officials section of the guidance.  In summary, the guidance made it clear that corporate hospitality and gifts to Foreign Public Officials were not outlawed in principle.

Against this backdrop ironically it is now reported that anti-bribery organisations are critical of the stance taken by the Ministry of Justice in the guidance in this context on the basis it is too permissive.  You can’t please all the people all the time, as they say…

In our view the solution is a clear policy.  We recommend imposing financial limits and tiered approvals if corporate hospitality and gifts are to be given.  After all, your sales team simply want to know how much they can spend without needing to obtain approval, when they should seek approval and some basics about what is and is not acceptable in any context.

A clear policy is the best way of dealing with this.  While setting financial limits and some basic rules around them may not be perfect we have yet to find a better solution to the problem.

Speaking in China the SFO Director confirmed that the SFO understands the culture of gift giving in certain jurisdictions.  Indeed he confirmed that the SFO itself offers gifts in appropriate circumstances.  Though sadly he did not elaborate on what gifts the SFO provides.

This is what he said:

“Corporations can be very worried about providing gifts to people with whom they do business (particularly foreign officials).  Some people have thought that this is unlawful under the Bribery Act. This view is wrong.  There are countries in which the giving and receiving of gifts is part of the accepted culture.  Giving a gift to somebody in these circumstances is a mark of respect for them and is part of what is due to them because of the relationship that you have or want to have with them.  I myself bring gifts when I come to China.  I give these to my hosts at meetings because of the respect that is due to them and because it is important that the Serious Fraud Office is seen to show that respect.

Of course, the vast majority of people recognise that there is a line to be drawn.  Gifts given between business people that are a symbol of respect are one thing – very lavish gifts that are intended to influence the making of a decision are quite another.  People recognise this and know in my view where they should draw the line.”

For those who don’t know where to draw the line – we always recommend a clear policy…

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