Legal
Laying down the law Claudia Gerrard
When is corporate hospitality a bribe?
Rail employees need to be wary of accepting or offering corporate hospitality, and companies have to make sure they are aware of this says Claudia Gerrard
C
orporate hospitality is generally viewed as an integral part of running a business, combining marketing and networking to
increase sales or gain clients. In the rail industry, like many others, such corporate hospitality can take many forms. At Christmas, gifts to clients and suppliers, for example, are commonplace. Similarly, suppliers provide corporate hospitality to rail companies. These are not intended to be a bribe - they are seen simply as a way of developing relationships.
Such activities were deemed a legitimate part of a company’s business and, unless a public authority was involved, were not open to scrutiny. The recently enacted Bribery Act 2010 seemed set to change that. For the first time, the Act policed the way in which companies, and people working for or with them, act in connection with bribes and inducements.
The Act sets up three specific offences:
bribery, being bribed or failure to prevent an associated person from committing or receiving a bribe. Associated persons could cover employees, agents, subsidiaries and consultants. However, recent guidance indicates that liability will be limited to direct counterparties only.
A fourth offence covers bribing a foreign official and may be of limited applicability to the rail industry. So called ‘facilitation payments’ to public officials remain unlawful – regardless of the size of the bribe. This was confirmed in guidance from the Serious Fraud Office last year. Two key aspects for the rail industry are that, firstly, the law relates to provision of ‘any other advantage’. Secondly, an offence may occur even where there is no payment or financial
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advantage. There is no need for money to change hands or, indeed, for a bribe or inducement to be supplied or received. The crucial factor is whether the recipient acted improperly as a result of a potential bribe or inducement. For example, therefore, could accepting an invitation, but not attending an event, constitute a bribe?
The first conviction under the Act was announced in October 2011, when a court official admitted accepting £500 to ‘sort out’ a motoring offence. On 18 November 2011, the person concerned was jailed for six years: three years for accepting a bribe and six years for misconduct in a public office. The sentences were due to run concurrently. This was later cut down by two years in May 2012. Although this was a public sector worker, it highlights that it’s important to get it right. Penalties for
breach of the Act are severe, including an unlimited fine on a company and up to 10 years’ imprisonment for an offending individual. Any company working in the public sector may be banned from tendering for future public sector work. The only defence is to ensure that a company has ‘adequate procedures’ in place to prevent corruption. Government guidance on what this entails includes six guiding principles which need to be taken into account by companies. The guidance indicates that most corporate hospitality, in the traditional sense, will continue to be lawful. The need for approval from the DPP for any prosecution suggests that prosecutions will be unlikely for what the Justice Secretary has called ‘trivial cases’. The guidance significantly reduces the compliance obligations on smaller
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