A fine balance
David Green, the new head of the Serious Fraud Office, has confirmed that his organisation does not have corporate hospitality in its sights when it comes tackling bribery, and rightly so. Even last summer, the then Justice Secretary Ken Clarke confirmed that taking clients to Twickenham would not become a criminal offence once the Bribery Act was passed.
However, before businesses tear up their newly written gifts and hospitality guidelines: a note of caution. A Sainsbury’s buyer was jailed for four years this summer for accepting almost £5 million in bribes from a supplier, over £1m of that in the form of gifts and hospitality.
This included lavish holidays to Cannes and St Tropez, a £350,000 trip to the Monaco Grand Prix, hotel rooms at Claridge’s and a top of the range Aston Martin; all set up through foreign bank accounts and secondary businesses to mask the flow of money and protect a £40 million contract to supply the supermarket chain with potatoes. The cost of all this was written off in the supplier’s accounts as ‘team building’.
While no one would argue that team building in business is important, few would disagree that this was excessive, extreme and possibly pointless; the judge in the case concluded that there was no evidence that the account may ever have been in jeopardy.
So although it is clear from both the SFO and the Ministry of Justice that corporate hospitality in itself is not a major target for fraud prosecutors, companies nonetheless need clear systems and controls which are properly communicated, implemented and monitored to ensure their business is fully protected.
Guidance on the Bribery Act states that gifts and hospitality need to be proportionate and clearly designed to build business relationships rather than influence decisions.
Lawyers and consultants advising companies to end all forms of entertainment are missing the point. Businesses should be urged to develop a clear system that enables them to get the balance right. Encouraging a decision-making process
that asks the right questions is a good starting point and properly implemented can offer companies the right protection. Entertaining at Twickenham or even the Grand Prix won’t land anyone in jail, unless of course it’s the tip of a much bigger iceberg.