Corporate hospitality must be reasonable and proportionate says SFO

The Bribery Act, which came into force on 1 July, does not criminalise genuine hospitality, but Government guidance (45-page / 380KB PDF) indicates that more lavish expenditure in relation to travel or accommodation is likely to be regarded with suspicion.

This could affect invitations extended to clients and suppliers to high-profile events such as the 2012 London Olympics, Sky News recently claimed.

To be illegal, corporate hospitality must "provide an advantage to another person and be offered or given with the intention of inducing the person to perform a relevant function improperly or in the knowledge of acceptance of the advantage would in itself be improper performance," the Bribery Act says.

A spokesperson for the SFO told thebriberyact.com, that it would consider five factors when assessing the legality of hospitality.

Where the SFO is considering whether any particular case of corporate hospitality is a bribe, it will look for evidence of a "clear issued policy" within the company regarding gifts and hospitality, the SFO told thebriberyact.com, which is published by corruption law specialist Barry Vitou of Pinsent Masons, the law firm behind OUT-LAW.COM.

The SFO will look to see if the amount spent was "within the confines of" this policy and, if not, whether special permission for it had been sought at a high level within the company, it said.

The cost must be proportionate with regards to the recipient, who must be entitled to receive the hospitality under the national laws of that country, the SFO said.
Any expenditure on corporate hospitality must also have been recorded by the company, it said

The inference that the hospitality was intended as a bribe would be strengthened if there were unjustifiable 'add-ons', for example with regard to travel or accommodation, or if it occurred around the same time as some actual or potential business was being decided with the recipient - particularly in a competitive context, the SFO said.

"These new five factors on corporate hospitality are a welcome clarification and should now kill off some of the scare stories which have been circulating particularly in the run up to the Olympics," said Barry Vitou.

The Ministry of Justice has issued guidance on what companies can do to protect themselves against accusations of bribery.

"Bona fide hospitality and promotional, or other business expenditure which seeks to improve the image of a commercial organisation, better to present products and services, or establish cordial relations, is recognised as an established and important part of doing business and it is not the intention of the Act to criminalise such behaviour," the guidance says.

For more news and information on the Bribery Act see www.thebriberyact.com from Pinsent Masons bribery expert Barry Vitou.