* Any views expressed in this opinion piece are those of the author and not of Thomson Reuters Foundation.
Michelle Witton (www.mwethics.com) is a Compliance Lawyer, specializing in Bribery Act 2010 and Competition Law compliance. She has worked for AstraZeneca plc and Anglo American plc. Contact Michelle on 07950 932070.
The introduction of the Bribery Act 2011 has caused uncertainty in business about what, if any, corporate hospitality can be provided to clients. Are the days, even of the chocolate Hobnob, numbered? With the prospect of 2012 Olympics corporate boxes sitting empty, Government and The Serious Fraud Office (SFO) have addressed the question.
Government guidance says, “Bona fide hospitality and promotional, or other business expenditure which seeks to improve the image of a commercial organization…is recognized as an established and important part of doing business and it is not the intention of the Act to criminalise such behavior.”
Richard Alderman, Director of the SFO, in his 7th April, 2011 speech, “Managing Corruption Risk in the Real World” said, “Normal corporate hospitality is part of business and is a part of building up relationships that are needed in order to make business work. This is not a problem. Buying meals and putting foreign public officials up for reasonable accommodation again is not a problem. Nor is flying a group of foreign public officials…to see one of your sites. This is normal business. This is to be encouraged.”
What criteria should be used by companies in providing corporate hospitality?
1. Context and timing – is the business waiting on a decision/contract with a company offered hospitality? Gifts and hospitality in this context may appear to influence the decision.
2. Approval – companies should have in place a clear, considered corporate hospitality policy and approvals criteria.
3. Industry practice – is it normal industry practice to offer hospitality of this nature?
4. Lavishness - is the hospitality disproportionately lavish? Might this cause the recipient to feel under obligation to your company? Also, different cultures will have different perceptions of lavishness. What may be usual hospitality in Britain may be lavish in a less prosperous country.
5. Recipient – what is the position/seniority of the recipient? Are they in a position to make a current relevant decision regarding your company? If so, extending more than usual corporate hospitality would not be appropriate in this context.
6. Business Purpose – is there a specific, business-related, purpose for the hospitality? It is advisable to confine hospitality to those with whom your company does business directly. There is a change in perceptions on appropriateness - hospitality should not be extended to the spouse/family of business people except in specific, exceptional circumstances.
7. ‘The Newspaper Test’ – how would a newspaper report the hospitality? Could this affect public perceptions of the company?
Carefully consider the above criteria – and enjoy building business with your clients!
