Corporate Hospitality Packages For The London 2012 Olympics And Infringement Of The UK Bribery Act - Much Ado About Nothing?

Author:Ms Jennifer Peru Gary and Shawn M. Wright
Profession:Blank Rome LLP
 
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With the London 2012 Olympics fast-approaching, many corporations are wondering whether they can provide corporate hospitality packages to their current and prospective customers, suppliers and business partners without the risk of violating the UK Bribery Act. The UK Bribery Act ("the Act"), which came into effect on July 1, 2011, applies to all organizations incorporated or formed in the UK, or conducting all or part of its business in the UK. Thus, the Act has both a domestic element and a global reach into foreign companies with UK interests that may view the Olympic Games as a business opportunity to entertain business clientele. In a commercial context (i.e., not involving foreign public officials), the Act criminalizes the provision of a financial or other advantage to another person that was offered or provided with the intention of inducing the recipient to perform a relevant function improperly or with the knowledge that the acceptance of the advantage would in itself be improper performance. Under the Act, improper performance of a function is conduct which amounts to a breach of a reasonable person in the UK's expectation that a person will act in good faith, impartially, or in accordance with a position of trust. Bribery in both the public and private sectors is covered by the Act. The Act also holds companies strictly liable for failure to prevent bribery by an associated person, unless the company can show that they had adequate procedures in place to prevent the bribery.

Although at first blush the Act appears to be so broad and harsh that providing or accepting corporate hospitality might infringe the Act and therefore be illegal, Guidance provided by the Ministry of Justice makes it clear that the Act is not intended to penalize expenditure on corporate hospitality for legitimate commercial purposes.1 Specifically, the Guidance states that "Bona fide hospitality and promotional, or other business expenditure which seeks to improve the image of a commercial organisation, better to present products and services, or establish cordial relations, is recognised as an established and important part of doing business and it is not the intention of the Act to criminalise such behaviour." The Guidance further notes that the Government does not intend for the Act to prohibit "reasonable and proportionate hospitality." However, the more lavish the hospitality provided or the higher the expenditure in relation to travel, accommodation...

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