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Corporate gifting and the Bribery Act
For businesses, whether giving or receiving corporate gifts, there are rules governing the practice which must be followed.
Under the regime introduced in 2011 by the Bribery Act, any corporate hospitality or gifting must be reasonable and proportionate.
In simple terms, bribery is giving or offering a person a financial or other advantage with the intention of inducing them to act improperly. It is also a crime to ask for or to receive an inducement in return for acting improperly.
What is bribery and what are the offences under the Bribery Act 2010?
The four offences under the Bribery Act are:
- Paying bribes: to give or offer someone an incentive with a view to inducing them to act improperly
- Receiving bribes: to receive an incentive with the intention of acting improperly as a result
- Bribery of foreign officials: to give a foreign public official an incentive with the intention of influencing the official and obtaining business as a result
- Failure to prevent bribery: a commercial organisation will be guilty of an offence if a person connected with that organisation (including employees, subsidiaries, and agents) commits one of the individual bribery offences above, unless the organisation can show it was unaware and that there were adequate procedures in place.
Since the introduction of the Act, the Serious Fraud Office has taken an increasingly tough approach to tackling corruption. In a recent high-profile case, a division of a multinational transport company was hit with a massive £15m fine for corrupt business activities, after a €2.4 million bribe was paid to secure a €79.9 million contract to supply tram services to Tunisia. Even the smallest companies can feel the force of the law if they don’t have the right checks in place.
Whatever their size, every company must demonstrate they take corruption seriously and have appropriate policies in place. Whilst the legislation details the offences that may be committed by individuals, it also sets out how a company may be criminally liable if it fails to prevent bribery. Even if the company didn’t know the bribery was taking place, it could still be liable if there was a lack of adequate procedures.
Good practice includes undertaking routine risk assessments and reminding staff regularly of the value and types of gifts it is okay to give or receive, with permission required for anything outside this. To this end, it may also be useful to keep records of all corporate gifting or entertaining.
As well as the value involved, intention and timing should also be considered.
If the gift or hospitality involves a way to promote the company, then it’s more likely to be considered as reasonable business development. So, for example, a company-branded gift or a corporate get-together where staff can meet customers would be more appropriate than handing over tickets for a sporting event to attend with friends or family or sending cases of expensive wine.
Lavish hospitality and expenditure, particularly if it’s unconnected to a legitimate business activity, is more likely to be interpreted as undue influence, intended to encourage or reward improper performance.
The case mentioned above followed a ten-year investigation by the Serious Fraud Office across a number of companies in 30 countries, and was just one of the instances identified where bribery had taken place. Charges brought against the companies and individuals across three linked cases were conspiracy to corrupt, contrary to s1 of the Criminal Law Act 1977 and s1 of the Prevention of Corruption Act 1906, as the actions pre-dated the introduction of the Bribery Act 2010. Charges under the earlier legislation relied on the ‘identification’ principle to obtain a corporate conviction for bribery, which the Bribery Act was designed to overcome. The identification doctrine holds that, for a company to be guilty of a criminal offence, it must be established that someone who can be described as its ‘directing mind and will’ is involved in committing the offence.