The Bribery Act 2010 came into force on 1 July 2011 and prohibits both private commercial bribery and bribery of foreign public officials. It also introduces a corporate offence of failing to prevent bribery.

The Act raises many questions, one of which being: are gifts and corporate hospitality bribes?

The Guidance published by the Ministry of Justice in relation to the Act states that any bona fide hospitality, promotion or business expenditure which seeks to improve the image of an organisation, better present its products or services, or establish cordial relations will not be prohibited by the Act and in fact is recognised as an established and important part of doing business.  The Government therefore does not intend for the Act to prohibit “reasonable and proportionate” hospitality and promotional expenditure incurred in “good faith” for these purposes.

In the Guidance, Lord Chancellor Kenneth Clarke has assured businesses that the Act does not stop them getting to know their clients by taking them to events like Wimbledon, Twickenham or the Grand Prix. The Quick Start Guide, also published by the Ministry of Justice, provides some further examples of what is allowed, and states that tickets to sporting events, taking clients to dinner, offering gifts to clients as a reflection of your good relations or paying for reasonable travel expenses in order to demonstrate your goods or services to clients will not amount to bribery as long as they are reasonable and proportionate for your business.

The Act is not designed to stop marketing, but to stop the giving, offering, soliciting or receiving of financial advantages that change behaviour inappropriately. The hospitality / gift should therefore not place the recipient under any obligation or create an expectation. Relevant factors to consider in determining whether hospitality or gifts could be seen as bribes include:

  • The context of the gift / hospitality - A gift given to celebrate a deal is likely to be less controversial than a gift given to an official who is in the process of considering a tender.
  • Whether the gift / hospitality is linked to the business, e.g. does it better present the business’ products? The nature of the relationship between the business and the guest, the position of the guest in their organisation and whether the hospitality is limited to the person with whom the organisation does business of whether the invitation extends to their families.
  • The nature of the benefits which may be secured.
  • The value of the gifts - Whether the recipient is able or likely to purchase something of comparable value from his/her own resources reasonably routinely. Cash gifts should never be given.
  • Whether a reasonable person would regard the entertainment / gift as unduly extravagant.
  • Whether there is transparency, for example is the recipient and / or giver obliged to report it to their employer, and it is recorded.
  • The standards or norms applying in a particular sector, for example, it being customary in a particular sector for every manufacturer to take clients to a specific overseas event.
  • Whether the gift / hospitality is a one off or given frequently

Gifts and hospitality are still a grey area, but gifts that are of a large financial sum, or hospitality that is of a large financial value may arouse suspicion. In general, the higher the expenditure or more lavish the hospitality provided, the greater the inference that it may be intended to influence the granting of business or a business advantage in return.

Businesses should establish and disseminate appropriate standards for hospitality and promotional or other similar expenditure. The organisation should have a policy in relation to this and it may be that financial limits on hospitality or gifts and requirements for reporting are imposed. Businesses should not feel that they need to stop hospitality and gifts but should satisfy themselves that they are proportionate and are provided for the right reasons.