Christmas brings a round of festive celebrations with drinks, dinners and bottles of wine shared between customers and suppliers, but whether giving or receiving, businesses need to keep up with the rules on corporate gifting.
In the past few years, the UK Bribery Act—along with the French Sapin II, the Spanish Criminal Code, the Italian “Bribe Destroyer” bill, the German “Law to Strengthen Business Integrity” and many other Anti-Bribery and Corruption laws and regulations —has been gaining traction in enforcement.
Bribery and corruption are prohibited, illegal and the source of fines, penalties, reputational damage, and in some cases criminal liability. This is equally true when the bribes are offered by third parties.
So, the key is that any corporate hospitality or gifting must be reasonable and proportionate, and businesses 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 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.
Whatever their size, any business 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.
NB: Even if you didn’t know the bribery was taking place, you 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 corporate 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.
Please also remember that 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.
Always remember that 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.
In conclusion, whether during the festive season or not, it is clear that businesses are expected to adopt a risk-based approach to ethics and compliance to ensure their programme devotes appropriate resources and scrutiny to high-risk areas and transactions.
A thorough assessment of your organisation’s risk profile can help you understand where corrupt behaviours might occur. The work doesn’t stop there – you should further investigate and resolve the identified red flags, as well as update your policies, procedures, and controls in light of lessons learned from your periodic risk assessments.
Regards to all
