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The Bribery Act 2010 references the controversy surrounding the practice of hospitality within business, as hospitality can be used to conceal bribery. Therefore, the Bribery Act and the Ministry of Justice have drawn a distinction between hospitality and bribery to allow the practice of hospitality to continue, but in an honest, transparent and lawful way. If an organisation wishes to engage in hospitality, then they need to have a thorough understanding of the Bribery Act to ensure compliance.
What does the Bribery Act 2010 state about hospitality?
The Bribery Act 2010 does not explicitly prohibit corporate hospitality and gifts, instead it states that hospitality and gifts which are reasonable and proportionate are allowed. However, the act does take into consideration the fine line between hospitality and bribery; therefore, the Bribery Act can be used to expose certain cases in which hospitality is used to conceal a bribe.
Kenneth Clarke, when conducting a statement on the Bribery Act, highlighted that although the new legislation could be considered as strict, it was not aimed at making it difficult for law abiding firms to treat their employees or work associates with gifts and hospitality. The act is simply ensuring this practice of hospitality is conducted in an appropriate and fair way.
The Ministry of Justice and the Bribery Act both demonstrate consideration of this, and therefore in conjunction there has been three critical factors created for organisations to consider when partaking in hospitality.
1) The intention behind the offer (is the intention to achieve a business advantage?)
2) The value of the offer (if the gift is very high in value, then it might be questionable)
3) The timing of the offer (if the gift is offered just before an important business deal is about to be processed, then it might be questionable)
How can businesses continue to offer hospitality and gifts whilst remaining compliant with the Bribery Act 2010?
For a business to offer hospitality and gifts, they need to ensure that what they are offering is appropriate, therefore a threshold needs to be established. This needs to be established in relation to the industry in which the business rests, this will ensure that gifts are not excessive for the industry. For example, a business which wants to offer reasonable travel expenses to an employee or work associate as a gesture of good work relations can do so, as long as this gesture is reasonable and proportionate to the business.
A company which wishes to still administer gifts, hospitality gestures and travel to work associates, can conduct this whilst protecting themselves, through establishing policies on this matter. For example, if an organisation creates a set of policies which reference the specific types of hospitality which are not permitted, then this written policy is a demonstration of the organisation’s compliance with the Bribery Act, as it is a form of adequate procedure. This policy needs to be well communicated amongst employees to ensure each employee understand when and how to conduct hospitality gestures correctly, if they wish to do so.
If an employee offers a gift to a contractual counterparty which opposes the organisation’s hospitality policy and standards, then that employee will be held accountable, not the organisation which has clearly demonstrated implementation of adequate procedures. Adequate procedures are in place to prevent bribery and corruption from taking place within an organisation, and this is why the Bribery Act stresses the importance of adequate procedures, because they can protect an organisation against a fine.
Furthermore, it is wise for an organisation to avoid hospitality offerings with foreign public officials as this aspect of the Bribery Act is more contentious. Bribing a foreign public official is a specific and considerable offence, therefore more analysis and investigation will be taken into the hospitality and gift offering to a foreign public official than would normally take place. Thus, to avoid the potential fine, it is probably wise to avoid engaging in hospitality with foreign public officials.
Therefore, if an organisation wishes to conduct hospitality and gift offering, then they should have a sound understanding of the Bribery Act 2010 first, to avoid any serious repercussions from bribery offences.
