And thousands of Britons could be buried under mounds of unread newspapers – but both are unlikely
UPDATE 1 JULY 2011: The Bribery Act is now in force – for more information and for the Ministry of Justice guidance on the Act, see this post.
The Daily Telegraph says today that:
“Thousands of ordinary people and companies who give or receive corporate hospitality could find themselves under investigation if they err on the wrong side of the Bribery Act after July 1…The Ministry of Justice says there is no intention to ban legitimate hospitality but, disturbingly, lawyers say the statutes are open to different interpretations.”
The Telegraph appears particularly worked up about the giving or receiving of free tickets for the Wimbledon men’s final, as a “trip to the centre court could lead to an entirely different kind of court appearance” if the ticket was to be considered a bribe. It would be particularly risky, says the newspaper without giving any particular reason, if a donor of corporate hospitality did not accompany her guest to the event. (Generally, of course, people prefer to go with their clients to hospitality events – that is the point of the exercise.)
In the context of this style of media reporting, what have the Ministry of Justice (the MoJ) and the Serious Fraud Office (SFO) actually said about corporate hospitality and the Bribery Act 2010 (the Act)?
Guidance from the Ministry of Justice about corporate hospitality
On 30 March 2011 the MoJ published long form guidance about the Act and a “quick start” guide for smaller companies. We discussed these MoJ publications in this post.
The MoJ quick start guide contains the most concise statement of the Government’s understanding of what the Act means for corporate hospitality:
“The Government does not intend that genuine hospitality or similar business expenditure that is reasonable and proportionate be caught by the Act, so you can continue to provide bona fide hospitality, promotional or other business expenditure.
In any case where it was thought the hospitality was really a cover for bribing someone, the authorities would look at such things as the level of hospitality offered, the way in which it was provided and the level of influence the person receiving it had on the business decision in question. But, as a general proposition, hospitality or promotional expenditure which is proportionate and reasonable given the sort of business you do is very unlikely to engage the Act. So you can continue to provide tickets to sporting events, take clients to dinner, offer gifts to clients as a reflection of your good relations, or pay for reasonable travel expenses in order to demonstrate your goods or services to clients if that is reasonable and proportionate for your business.”
In his introduction to the MoJ’s procedures guidance, the Secretary of State for Justice said:
“Rest assured – no one wants to stop firms getting to know their clients by taking them to events like Wimbledon or the Grand Prix.”
These MoJ statements have no force in law; but they show what the Government thinks the Act means.
SFO and DPP statements about corporate hospitality
In the “Joint Prosecution Guidance” on the Act issued by the SFO and the Director of Public Prosecutions (DPP) on 3o March 2011 (which we also discussed in this post), the SFO and DPP say:
“Hospitality or promotional expenditure which is reasonable, proportionate and made in good faith is an established and important part of doing business. The Act does not seek to penalise such activity.
The more lavish the hospitality or expenditure (beyond what may be reasonable standards in the particular circumstances) the greater the inference that it is intended to encourage or reward improper performance or influence an official. Lavishness is just one factor that may be taken into account in determining whether an offence has been committed. The full circumstances of each case would need to be considered. Other factors might include that the hospitality or expenditure was not clearly connected with legitimate business activity or was concealed.”
In a speech on 9 February 2011, which we reported on in this post, Richard Alderman, the Director of the SFO summarised the SFO’s views on corporate hospitality as being that “sensible proportionate entertaining or promotional expenditure” is “perfectly lawful” – but if a company pays for a prospective client’s “month long all expenses paid” Caribbean holiday, “you will not be surprised if the SFO takes an interest”.
Proportionality and common sense
A central theme of MoJ and SFO guidance about the Act is that corporate hospitality that is proportionate and reasonable will not constitute a bribery offence – and what is proportionate and reasonable is largely a matter of common sense. It is also worth bearing in mind that any and each prosecution under the Act in England and Wales will require the personal consent of the DPP or of the Director of the SFO, and in considering whether a prosecution should proceed, they will need to be satisfied that it is in the public interest.
Given the statements in the guidance issued about the Act and the consent required for a prosecution, it seems improbable in the extreme that “thousands of Britons” are going to fall foul of the Act.
Friendly Corporate PSL
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