Yes – while there is no specific exception or defence for corporate hospitality, the Act does not prevent or discourage hospitality, provided that it is proportionate and reasonable relative to the type of business being conducted. For example, the Guidance suggests, “…an invitation to foreign clients to attend a Six Nations match at Twickenham as part of a public relations exercise designed to cement good relations and enhance knowledge in the organisation’s field is extremely unlikely… to be evidence of an intention to induce improper performance of a relevant function.” In his Foreword to the Guidance, the Justice Secretary indicates that corporates can “Rest assured – no one wants to stop firms getting to know their clients by taking them to events like Wimbledon or the Grand Prix”.
As a general rule of thumb, the Guidance notes (in the context of hospitality given to foreign public officials): “the more lavish the hospitality... then, generally the greater the inference that it is intended to influence the official to grant business or a business advantage in return.” Nevertheless, bribes can also be based on “relatively modest expenditure”. Therefore, while consideration of what is normal or expected in a particular sector or country is relevant in assessing whether the hospitality falls the wrong side of the line, it is not conclusive, particularly if those norms are extravagant.
Like the Guidance, the joint guidance on prosecutorial decision-making under the Act published by the Department for Public Prosecutions and the SFO (the “Prosecution Guidance”) is very clear that hospitality which is “reasonable, proportionate and made in good faith” will not be penalised (click here to view the Prosecution Guidance). However, if the hospitality had no clear connection with legitimate business activity or had been concealed in some way, this would increase the likelihood of an inference that it was a bribe. Transparency will be key.
On its website, the SFO has reiterated that bona fide hospitality, promotional or other legitimate business expenditure is recognised as an established and important part of doing business. It notes that when making a decision whether to prosecute, it will consider the Code for Crown Prosecutors, as well as the Prosecution Guidance and the Joint Guidance on Corporate Prosecutions, where relevant. The SFO notes that it will prosecute if it is in the public interest and if there is a realistic prospect of conviction.
In developing policies and procedures in this area, a simple way of ensuring a consistent approach is to adopt clear rules with appropriate threshold limits as to what is permitted (following a risk assessment), with corresponding prior approval processes and procedures (which can then be escalated according to the value of the expenditure for which approval is sought) and rules to prevent conflicts of interest arising among the decision-makers. Of course, setting thresholds does not guarantee that anything within them or exceeding them is or is not a bribe. However, their purpose is to set down a process that enables a consistent approach to be taken, rather than leaving it to those who are receiving or offering the hospitality to make the decision whether they are putting the organisation at risk and being offered (or offering) a bribe - or could be perceived to be doing so.
What the appropriate thresholds should be will depend on the risk assessment and what is appropriate for your organisation in the way it operates. However, where the thresholds are set is, within reason, less important than being able to show that your organisation considered this issue and took a reasonable (and documented) approach in setting them to limit the risks it faces. Having set the figure, monitoring of the rules being followed is vital along with regularly reassessing whether the rules are working in practice and that the thresholds are the right ones for the business.