Can I bring my client to the All-Ireland Football Final to thank her for her business? Can I offer my supplier tickets to take her children to the pantomime? Can I `wine and dine' someone I am trying to win business from?
The recent enactment of the Criminal Justice (Corruption Offences) Act 2018 has raised concerns that corporate hospitality might now be criminalised.
The Act does not expressly prohibit corporate hospitality, nor does it exempt it, however, something more than simply giving a business associate tickets to a match is needed to bring corporate hospitality into the criminal sphere.
WHEN MIGHT CORPORATE HOSPITALITY CROSS THE LINE?
Common examples of corporate hospitality such as meals, match tickets and other entertainment fall within the scope of "gift, consideration or advantage".
However, that does not mean that you cannot bring an important client to the All-Ireland final. The Act does not criminalise corporate hospitality that is offered simply to maintain good business relations.
For corporate hospitality to amount to an offence, it must be done corruptly, i.e. with an improper purpose personally or by influencing another person.
There is also a further `inducement' element. The corporate hospitality must be offered as an inducement to, or reward for, doing an act in relation to one's employment, position or business (active and passive corruption) or to induce someone to exert an improper influence over an Irish or foreign official (active and passive trading in influence).
So if you offer to bring a client to the AllIreland in order to induce them to enter into a contract, that may amount to an offence under the Act.
THE UK POSITION
When the Bribery Act was introduced in the UK in 2010, there were concerns that the provision of corporate hospitality would be prosecuted. The UK Ministry of Justice issued guidance to clarify the situation:
"bona fide hospitality and promotional, or other business expenditure which seeks to improve the image of a commercial organisation, better to 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 [UK Bribery Act] to criminalise such behaviour".
The UK Director of the Serious Fraud Office and the UK Director of Public Prosecutions further clarified that corporate hospitality is not criminal where it is proportionate, reasonable and made in good faith.
The Irish authorities have not yet issued any guidance on the Irish position, but the approach here is likely to mirror the common-sense approach in the UK.
However, that is not to say corporate hospitality may never amount to an offence or that it will not be prosecuted here if it crosses the line.
Particular care should be taken where hospitality is offered to a potential new client or during a tender process before or at the time a new contract is awarded.
Factors that may be relevant when assessing whether corporate hospitality amounts to an offence include:
- the context and timing of the provision of the corporate hospitality;
- the level of hospitality offered;
- the way in which it was provided;
- the level of influence the person receiving it had on the making of business decisions;
- whether the corporate hospitality
- was connected to a legitimate business activity; and
- whether the corporate hospitality was provided openly and recorded in a register or whether it was concealed.
MINIMISE THE RISK
- Put in place clear and comprehensive anti-corruption policies or review existing policies already in place.
- Ensure all personnel receive training on these policies and on how to recognise and deal with suspected bribery.
- Discuss and review the effectiveness of the policies and procedures at Board level. Remember, ultimate responsibility rests with the Board.
- Appoint a compliance manager with day-to-day responsibility for implementing the policies, monitoring their use and effectiveness and updating them as necessary.
- Keep a written record of any gifts/ advantages given or received.
- Communicate your organisation's zero-tolerance approach on bribery to third party service providers, suppliers and other organisations with which you do business.
In 2015, a Scottish network cabling company, Brand-Rex Limited, paid a sum of 212,800 under an agreed civil settlement with the Scottish Crown Office, after it accepted that it had failed to prevent bribery conducted by a third party.
Brand-Rex ran an incentive scheme for distributors and installers of its products whereby it gave rewards, such as foreign holidays, to those who met or exceeded sales targets. This scheme in itself was not unlawful.
However, an independent installer of Brand-Rex products offered tickets it received through the scheme to an employee of one of its customers in return for that customer purchasing Brand-Rex cabling. The employee who received the tickets was in a position to influence purchasing decisions in relation to cabling. This amounted to bribery and the company self-reported.