Holding the Olympic Games in London presents a unique opportunity for UK employers to build relationships with clients and contacts, and develop their businesses. However, with the Olympics taking place against the backdrop of difficult economic times and with the implications of the Bribery Act 2010 at the forefront of peoples’ minds, there is, rightfully, concern about the extent to which offering or receiving corporate hospitality for the Olympics is lawful. Chris Fisher and Laura Pharez, employment lawyers at Mayer Brown, look at the key questions that employers should ask themselves when dealing with hospitality.
While the price of Olympics packages (some packages can cost up to £6,500 per person) and the difficulty of otherwise obtaining a ticket has caused companies concern, this does not mean that corporate hospitality at the Olympics should not be offered or accepted. Businesses should, however, take a careful approach and follow an acceptable procedure when considering if it is appropriate.
Under the Bribery Act, a bribe is defined as “a financial or other advantage” offered, promised or given to induce a person to perform a relevant function or activity improperly, or to reward them for doing so. This is a very wide definition and covers many types of advantage, including corporate hospitality and client entertainment.
Failing to comply with the Bribery Act can lead to up to 10 years’ imprisonment for individuals, or an unlimited fine, or both, with companies potentially receiving an unlimited fine. However, the Bribery Act is not designed to prevent corporate hospitality. The key factor is the intent associated with the hospitality. An invitation is likely to be legitimate if the aim is to build a relationship with a client. It is unlikely to be legitimate if, for example, the intent behind the invitation is to achieve a favourable position at the time of a contract renewal.
There are a number of key questions that employers can ask themselves, to assist with deciding whether or not accepting or offering hospitality may fall foul of the Bribery Act:
Is offering tickets or accepting an invitation sensible and proportionate?
- Consider not only the monetary cost of the tickets/package but also whether or not that cost is appropriate to the relationship in question.
- Think about the status and seniority of the individual recipient and make sure that the invitation is proportionate.
- Make sure that the hospitality does not place the recipient under any obligation or create any expectation.
- Make sure that the timing of the provision of tickets/an invitation does not coincide with a key business decision.
What are similar businesses doing?
- Find out what other firms in your sector are doing to make sure that your approach is not completely out of line with that.
Does the hospitality follow your internal procedures and policies on gifts, hospitality and expenses?
- Make sure that any hospitality offered follows your own procedures and is properly documented. When the Serious Fraud Office considers whether or not an activity falls outside reasonable hospitality, it will look at whether or not the scale of the expenditure is within the limits set out in company policy and whether or not the expenditure is documented.
- Issue invitations openly and in a transparent way.
- If offering hospitality, check whether or not it conforms with the recipient’s internal rules, as well as your own.
What is the general context?
- Consider the overall situation. For example, has the recipient been invited to lots of events? If so, consider the cumulative effect of these invitations.
- Be careful about any “add-ons”, for example travel, accommodation or extending the invite to spouses or family. Offering these extra perks can strengthen an argument that the hospitality is disproportionate.
Am I inviting a foreign public official?
- Be especially careful if foreign public officials (FPO) are involved. FPOs are subject to stricter rules than others.
- Check whether or not the FPO is entitled to receive the hospitality under their jurisdiction’s laws and restrictions.
Employers need to make sure that employees are aware of their obligations under the Bribery Act and understand internal policies on hospitality and expenses. Employees should be made aware that if they are in any doubt as to whether or not they can offer or accept an invitation to the Olympics, they should consult senior management. Central coordination of all Olympics hospitality is important in any case, so that the kinds of questions raised above can be monitored across the business.
Chris Fisher, partner in the employment group, and Laura Pharez, associate in the employment group, Mayer Brown