Monday, 11 July 2011

Corporate hospitality must be reasonable and proportionate

The Serious Fraud Office (SFO) will look at five factors when considering whether corporate hospitality breach new anti-corruption laws, it has said.

The Bribery Act, which came into force on 1 July, does not criminalise genuine hospitality, but Government guidance (45-page / 380KB PDF) indicates that more lavish expenditure in relation to travel or accommodation is likely to be regarded with suspicion.

This could affect invitations extended to clients and suppliers to high-profile events such as the 2012 London Olympics.

The inference that the hospitality was intended as a bribe would be strengthened if there were unjustifiable 'add-ons', for example with regard to travel or accommodation, or if it occurred around the same time as some actual or potential business was being decided with the recipient - particularly in a competitive context, the SFO said.

The five factors are listed below.

The SFO’s five factors

Here is what the SFO have said:

Where the SFO is considering whether any particular case of corporate expenditure appears to fall outside the bounds of reasonable and proportionate hospitality, it will be looking to see whether:

1. the company has a clear issued policy regarding gifts and hospitality,

2. the scale of the expenditure in question fell within the confines of such policy and if not, whether special permission for it had been sought at a high level within the organisation,

3. the expenditure was proportionate with regard to the recipient,

4. there is evidence that such expenditure had been recorded by the Company,

5. the recipient was entitled to receive the hospitality under the law of the recipient's country.

The inference that the expenditure was intended as a bribe would be strengthened if it should transpire

(a) that there had been any unjustifiable ‘add-ons’, for example with regard to travel or accommodation, or

(b) that that the expenditure in question could be related in time to some actual or anticipated business with the recipient, particularly in a competitive context.

Read the full story from the source Out-Law

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