The Bribery Act & Corporate Hospitality

For a number of years before the Bribery Act came into force on 1 July 2010, many companies had strong fears that this piece of legislation would spell the end of corporate hospitality as we know it in the UK.

Justice Secretary at the time of implementation, Ken Clarke, announced that "Bona fide hospitality, promotion or other business expenditure which seeks to improve the image of a commercial organisation, better 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 makes clear that no one is going to try to stop businesses getting to know their clients by taking them to events like Wimbledon, Twickenham or the Grand Prix," said Clarke. "Reasonable hospitality to meet, network and improve relationships with customers is a normal part of doing business."

The new rules should be warmly received in the corporate world as guidance states that The Act should not be used to prevent companies from entertaining customers, dispelling the myth that corporate guests in breach of The Act may have been at risk of prosecution for accepting corporate hospitality.

The Act brought much-needed clarification to what was widely regarded as an old and confusing set of bribery laws, with businesses worrying that it would make corporate hospitality illegal and placing too big a burden on companies for the behaviour of rogue staff.

The original guidance produced by the previous Government was criticised by the Law Society for being too vague and the current Government delayed the implementation of the Act in order to write this new guidance.

The guidance clarifies what is meant by adequate procedures, and said that this would be considered in the light of the size and kind of company involved.

"Small organisations are unlikely to need procedures that are as extensive as those of a large multi-national organisation," said the guidance. "A very small business may be able to rely heavily on periodic oral briefings to communicate its policies while a large one may need to rely on extensive written communication."

The new guidelines place an emphasis on companies employing proportional means to eradicate bribery, which will bring businesses peace of mind under this new common sense approach when considering corporate entertainment for customers or suppliers.

The guidance was welcomed by trade body the Confederation of British Industry (CBI) who "welcome this much-improved final guidance", said CBI chief policy director Katja Hall."The Government has listened to concerns that honest companies could have been unwittingly caught out by poorly-drafted legislation and has clarified a number of important areas. These include the extent of liability through the supply chain, joint ventures, due diligence and corporate hospitality."

For further guidance please refer to the Bribery Act 2010 website.