Due to come into force in April 2011, the Bribery Act 2010 is likely to signal the end of lavish corporate hospitality. The Act, which in many ways goes much further than the much-feared US Foreign Corrupt Practices Act, will apply to any commercial organisation which operates in the UK (whether registered in the UK or not). The concerns arise from the combination of two central elements in the new Act:
- the offence of bribery is committed where a person offers, promises or gives a financial or other advantage (my emphasis) in an attempt either to secure an advantage from another person by persuading them to act improperly, or to reward someone for having acted improperly; and
- there is a new 'corporate offence' of failing to prevent bribery, which is a strict liability offence (subject to one defence, discussed below).
Given that the definition of bribery covers non-cash advantages such as gifts, sponsored travel and hospitality (as well as more traditional cash bribes), and given that an employer will be strictly liable for the acts of not only its employees, but also those of anyone who 'performs services for or on behalf of' the organisation, many businesses are now fearful of how far the implications of this legislation will spread. What if a member of the sales team, desperate to secure a major new client, arranges VIP tickets to a major sporting event for the CEO of that potential new client? If the ticket in question was to the next Ashes test match, and included First Class flights to Australia for the CEO and his family, plus accommodation in a 5 star hotel, all fully-paid, most people would probably agree that this would be over-generous, and could well be considered to constitute an attempt to bribe the CEO to put his business the way of the salesperson who arranged the trip. But what if the ticket was simply for the next home game at the local rugby club and the package extended to a seat in the grandstand, and buying the CEO a pint in the bar at half-time? The difficulty is identifying where to draw the line between what might be considered to be 'lavish' hospitality, which risks exposing the business to the corporate offence, and something which is merely part of normal day to day business practice.
The only defence to the corporate offence (ie of failing to prevent bribery) is to prove that the organisation had in place 'adequate procedures' designed to prevent such acts of bribery. Whilst the Government has indicated that it will issue guidance in early 2011 (having concluded a period of consultation just a few weeks ago) that guidance will be just that – it will be neither exhaustive nor prescriptive. However, what seems clear from the draft guidance is that organisations need to take this legislation extremely seriously, with commitment being driven from the very top. At the very least, businesses need to ensure that they have clear, practical and accessible policies and procedures, and that those policies and procedures are effectively implemented, monitored and reviewed.
In the future, there really will be no such thing as a free lunch…