UK Bribery Act 2010: an end to corporate race days?

The Bribery Act 2010 is due to come into force on 1 July 2011. It will make wide ranging changes to existing bribery laws affecting businesses. There are fears that the Act casts its net too wide and that traditional corporate hospitality may be criminalised.

It has been a criminal offence in the UK to bribe a public official since the 19th Century. The Act now also means that dealings between private companies will be scrutinised for corruption.

Under the Act a company will commit an offence if it fails to prevent bribery by an associate (e.g. an employee) intended to gain an advantage for the business. The penalties for such an offence are severe: an unlimited fine for a company and an unlimited fine and / or up to 10 years imprisonment for its senior management.

The only defence to a charge of failing to prevent bribery is that of having in place “adequate procedures” to prevent it. The Government has recently published guidance on this which acknowledges (in the context of corporate hospitality) that “bona fide hospitality” is an established and important part of doing business and that it is not the intention of the Act to criminalise such behaviour. The guidance states that the Government does not intend for the Act to prohibit reasonable and proportionate hospitality, but does also confirm that (depending on the circumstances) hospitality could be viewed as bribery.

So the question remains – can a simple client lunch or a corporate race day reward you with a visit from the Serious Fraud Office?

Whilst each case is different and legal advice should be sought, the short answer will generally be ‘no’ since so long as you are transparent and proportionate in your hospitality you are unlikely to be viewed as having the relevant criminal intent. However, where your hospitality events are lavish or over the top (in all of the circumstances) then you run the risk of criminal intent being inferred.

What is certain is that a company with no established procedures in place to prevent bribery will have no defence. It is therefore essential that every company considers carefully and, where appropriate, seeks legal advice on the putting in place of suitable policies and procedures to prevent bribery occurring.

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