Like any other major sporting event, the Olympic Games attracts a large number of corporate sponsors. This summer’s Games in London are no different, with 11 long-term sponsors of the Olympics and a further 40 solely sponsoring the London 2012 Games.
But with the London Games looming ever closer into view, sponsors and businesses alike are having to think carefully about the extent of any corporate hospitality they plan to offer.
At previous Olympics, only official sponsors were able to treat clients to privileged hospitality. However, at the London Games, the wider business community will be able to buy hospitality packages, with top-end hospitality for the opening ceremony on 27 July costing up to £6,500 per person.
Prestige Ticketing, which is part owned by French catering firm Sodexo, is providing corporate hospitality at this summer’s Games and has a purpose-built hospitality pavilion within the Olympic Park in East London. Prestige Ticketing’s Chief Operating Officer, Alan Gilpin, has said that the Bribery Act has “to some extent, been a thorn in our side for the last year” and attributes fears surrounding the new regime to be a “contributory factor” to the relatively muted demand for its hospitality packages to date.
In addition, even though sponsors of the London Games are given ticket allocations, many have been wary of taking up their full allocations.
Other factors could well be at play. Companies may be reluctant to splash out on ostentatious hospitality in austere economic times and the public demand for tickets has led to criticism that the ballot system, adopted by organisers to allocate tickets, was unfair. One global sponsor of the Olympics are a good example of the sensitivities around the topic. The multinational corporation has put their entire allocation of tickets into a “nearest & dearest” programme, which aims to provide tickets to the friends and family of competing Team GB athletes.
So has the Bribery Act had a chilling effect on corporate hospitality in the lead up to the London Games?
When the Bribery Act came into effect in July 2011, it ensured Britain has one of the toughest anti-corruption regimes in the world. The Bribery Act differs from its American counterpart, the Foreign Corrupt Practices Act 1977, in that it doesn’t contain a defence for legitimate and bona fide promotional expenditure, such as travel and hotel expenses.
The Ministry of Justice and Serious Fraud Office have published guidance in relation to the Bribery Act, with both stating that, the more “lavish” the hospitality or expenditure, the greater the inference that it could amount to a bribery offence.
Grant Rogan, of Blenheim Capital, says his company has drastically cut corporate hospitality spending in the last year. A $2m-$3m a year budget, which would previously have included other marquee British sporting events, has been reduced to no more than $300,000. This is largely because of the uncertainty around the Bribery Act, particularly the current lack of interpretation in the courts surrounding what would constitute “lavish” expenditure.
Yet the Bribery Act had no intention of curtailing and criminalising legitimate corporate hospitality. The published guidance allows for "reasonable and proportionate hospitality" and the Department for Justice explicitly states that bona fide “hospitality and promotional expenditure…is...an established and important part of doing business”. And even where hospitality may at the outset appear lavish, it is stressed that the totality of evidence will be considered.
The international nature of the Games could put this guidance to the test. This summer, companies and individuals will travel to the UK from around the globe. And in some countries, the domestic corruption regimes will not be as stringent as the newly installed UK regime. Entertainment and hospitality, which is legitimate elsewhere, may not be lawful in the UK.
The London Games will certainly be the highest profile litmus test to date of what reasonable and proportionate hospitality means in practice.