Corporate hospitality could fall foul of new Bribery Act

Businesses could risk breaching the forthcoming Bribery Act when laying on corporate hospitality, a lawyer has warned.

The Act will apply not just apply to straightforward bribes but also to areas like excessive corporate hospitality. It replaces the Prevention of Corruption Acts which are now almost a century old and includes offences of active bribery and passive bribery by requesting or agreeing to accept a bribe.

It also introduces a new crime of "failure to prevent" bribery which will leave companies which cannot demonstrate they have put in place "adequate procedures" to prevent corrupt practices by their staff, or anyone acting on their behalf, facing unlimited fines as well as possible exclusion from future government contracts. 

The Government announced last week that the Bribery Act will now not come into force until April 2011 – it was previously expected to come into force this October.

Tom Beezer, an expert in multi-jurisdictional law with national law firm Bond Pearce, which has just launched a new anti-corruption team, said: "We don't want to scaremonger but lavish corporate hospitality could fall foul of the new legislation. That will not be taking someone for lunch down the road but perhaps more excessive hospitality like picking a client up in a private jet, wining and dining them with champagne and caviar en route to a sporting event overseas while spending a week in a six star hotel. Certain industries are more susceptible than others."

BAE recently paid a high cost for its actions having been fined almost £300 million in the UK and America for paying bribes of millions of dollars in an attempt to win contracts in Tanzania and Saudi Arabia.

Mr Beezer said international enforcement agencies such as the Serious Fraud Office and the US Department of Justice were increasingly collaborating on cross border cases raising the likelihood of successful prosecutions.

Beezer added: "Many companies will need to review how they behave to avoid being caught by the Act and it is important they are aware of the risks. It is critical they use the next few months to prepare by putting in place appropriate measures to ensure compliance.

"Many UK companies with overseas operations are likely to be aware of the US Foreign Corrupt Practices Act (FCPA) but the new UK legislation goes further to cover the bribery, or attempted bribery, individuals and companies as well as public officials and organisations. What is seen as acceptable and part of local custom in many parts of the world may be totally unacceptable under the new law."

Mr Beezer said the Act could be seen as exporting the British view of how business should be done overseas: "Different areas of the world may have a completely different view of how a relationship should be properly constructed and what is acceptable. Your overseas representatives, who may not be as aware of the UK legislation, might be doing something perfectly normal where they are based but the UK mother ship could fall foul of the Act."