Christmas is the season to be jolly and spoil your business associates with a box of chocs and a bottle of wine. ……But you could be giving yourself a massive Christmas hangover if you’re not careful and it has nothing to do with the booze! It is all about keeping up with the rules on corporate gifts – both when receiving and giving.
Under the regime introduced in 2011 by the Bribery Act, any corporate hospitality or gifting must be reasonable and proportionate, and companies who get it wrong may find themselves on the wrong side of the law.
Since the introduction of the Act, the Serious Fraud Office has shown an increasingly tough attitude towards tackling corruption. In one recent high-profile case, a division of multinational transport company Alstom 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. And while the issue of bribery may seem the domain of big business, even the smallest companies can feel the force of the Bribery Act if they don’t have the right checks in place.
Said Simon Bean, corporate lawyer with Wollens solicitors : “Whatever their size, every company must demonstrate they take corruption seriously and have appropriate policies in place. While 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 would include routine risk assessments and reminding staff regularly of the value and types of things it is okay to give or receive, with permission required for anything outside this. It’s also a good idea to require everyone to record anything and everything related to corporate gifting or entertaining, whatever its value, to help keep policies and thresholds uppermost in people’s minds.”
As well as the value of any gift or entertainment, other key factors to consider are intention and timing. While the timing is not likely to be problematic when gifted during the Christmas period, alarm bells could ring if there were a procurement process underway at the same time.
Similarly, if the intention is to build or reinforce relationships with a customer then having a clear business development opportunity for the company will make an event or gift more likely to pass the test.
Explained Simon: “If the gift or hospitality involves a way to promote the company it is more likely to be considered as reasonable business development. So, a company-branded gift or a corporate get-together where staff can chat with customers is going to be more appropriate than handing over hard-to-get tickets for a sporting event for the customer to attend with friends or family or sending cases of expensive wine.”
Lavish hospitality and expenditure, particularly if it is unconnected to a legitimate business activity, is more likely to be interpreted as undue influence, intended to encourage or reward improper performance.
Simon Bean, partner at Wollens can be contacted on firstname.lastname@example.org