Bribery – Or Christmas giving?


Patricia Rooney of Tughans writes:


As we approached the Christmas season we had a number of enquiries about corporate hospitality and the implications for our clients, in view of the provisions of the Bribery Act 2010. When does giving or receiving a gift become a bribe?

The Bribery Act 2010 came into force in July 2011 and consolidated and modernised pre-existing law. It introduced a number of offences which have far reaching consequences for business organisations, namely:

• The offence of bribing another person;
• The offence of accepting a bribe;
• The bribery of a foreign public official;
• Failure of a commercial organisation to prevent bribery.

The Act also provided that the Ministry of Justice (MoJ) would issue guidance about the implications of the Act, what could constitute a bribe and further, what commercial organisations can do to prevent persons associated with them from offering or accepting a bribe.

The MoJ Guidance was issued in 2011 and as the Bribery Act extends to England, Wales, Scotland and Northern Ireland, is of general application in all parts of the UK.

It is essential that any corporate organisation considers the principles set out in the Guidance. The 6 principles there are:

1. Proportionate procedures – are there clear, practical and acceptable procedures in place which provide for a method of effective implementation. Are they proportionate to the forum/sector in which the organisation carries on its business?
2. Top level commitment – do the procedures make it clear that the organisation adopts a zero tolerance approach to bribery.
3. Risk assessment – has the organisation carried out a risk assessment to ascertain the risk to their particular business: are there safe systems in place for periodic and documented assessments of the risk of bribery.
4. Due diligence – does the organisation carry out proper procedures for those who perform services for it and apply such procedures to any high risk situation within which it may find itself.
5. Communication process – is the policy and procedure communicated and monitored internally and externally; are employees aware of the organisation’s policy for giving and receiving corporate.
6. Monitoring and review – are the procedures ignored or reviewed and improved where necessary; is there a system for monitoring complaints and suggestions for improvement or seek guidance from management where required.

Section 1

Section 1 of the Act makes it an offence for a person to: offer or promise or give a financial or other advantage to another person which is a financial or other advantage offered, promised or given to induce a person to perform an activity or function improperly or, to reward them for doing so.

The test for deciding whether any function or activity is performed improperly is the test of what a reasonable person in the UK would consider as to the performance of that function or activity.

Consequently, in deciding whether a Christmas gift or offer of hospitality is what would normally be expected in business dealings or whether it is given or received to influence improper activities, it is worthwhile remembering that the test to be applied is what would be considered reasonable here, regardless of where the function or activity is actually being carried out.

So for example, the offer of a food hamper/flowers/vouchers/chocolates, or even tickets to a sporting or music event, is unlikely to amount to an offence of bribery under the Act – as there is unlikely to be evidence of an intention to induce improper performance of a relevant function. Instead, such corporate hospitality could be part of public relations, implementing and furthering good business relationships.

But what should an organisation do to ensure that all of its employees, officers etc are aware of its policy and the limits on giving and accepting hospitality at any time, particularly at Christmas?

Section 7

Most organisations will be aware that under Section 7 of the Act they could be liable for an offence as these provisions create a strict liability corporate offence of failing to prevent bribery. The penalties imposed for such failure are severe, with the risk that a conviction may lead to disqualification from tender processes. Unlimited fines and/or imprisonment are possible, with officers of the organisation held personally liable.

Whilst there has been publicity recently from the Serious Fraud Office about their first prosecution under the Act (this involves allegations of fraud amounting to £23million in connection with the promotion and selling of bio fuel investments products to UK investors) such proceedings are not of great assistance in determining the reach of the Act to corporate hospitality.

Coporate Hospitality

Three other convictions under the Act involve somewhat more minor issues but none offer guidance on corporate hospitality. The case of Mr Patel has already been widely publicised. Mr Patel a court clerk who, for a small sum, would remove a driving offence from a data base, was convicted under the Act, and also for misconduct in public office. His 6 year sentence was reduced to 4 years on appeal.

The second conviction involved an official who was offered a bribe by Mr Mushtag, who offered his driving test examiner a bribe to let him pass a test. He had failed the test on many occasions and offered £200 or £300 to the examiner to allow him to pass on this occasion. The attempted bribe was reported and Mr Mushtag was sentenced to 2 months in prison, suspended for 12 months, with a 2 month curfew between the hours of 6pm and 6am.

A third conviction was the conviction of a master’s student who offered his tutor £5,000 in exchange for a pass mark. The student Yang Li was 3% short of a pass in his dissertation. The tutor refused, the offence was reported and Yang Li was convicted of bribery. He was sentenced to 12 months imprisonment and ordered to pay £4,880 costs.

Whilst the Act has now been in operation for 2 years, the proceedings and convictions above do not involve any allegations surrounding corporate hospitality nor indeed allegations that a commercial organisation failed to prevent such bribery.

In considering hospitality, organisations should therefore look to the MoJ Guidance and ensure that they can demonstrate that they comply with the 6 principles. Whilst the Court is the final arbiter of what constitutes a bribe under the Act, it is worthwhile considering: what would a reasonable person think of this type of gift/hospitality - why have gift vouchers from a high street retailer been replaced with a trip to the Monaco Grand Prix?