Christmas Gifts and the Bribery Act….

21 December 2017

Author: Stuart Anderson
Practice Area: Corporate - M&A

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It is long established custom and practice to exchange gifts with suppliers and customers at this time of year….but how do businesses reconcile this with the UK’s stringent anti-bribery regime?

The Bribery Act 2010 has raised concerns among some businesses as to whether the giving or receiving of gifts could amount to an offence. There is no legal definition of "gift”. What is more, in contrast to, for example under the anti-bribery regime in the USA where there is a clearly defined statutory defence for “legitimate promotional expenses” the UK Bribery Act contains no such specific defences. Guidance from the Ministry of Justice gives only some comfort in stating that the practice of giving and receiving corporate gifts that are reasonable, proportionate and made in good faith is customary, and it is not the purpose of the Bribery Act to penalise it.

At the heart of the issue for businesses is that it is now an offence for a commercial organisation where it fails to prevent “associated persons” committing bribery. “Associated persons” is a wide ranging concept and can include anyone that acts on behalf of an organisation, meaning employees, directors and agents to name but a few. A defence is available, being that of having “adequate procedures in place to prevent bribery”, however the onus rests with the organisation to demonstrate that those adequate procedures were in fact in place at the time of the offence.

So what can your Business do to ensure it stays on the right side of the Bribery Act this Christmas?

A. Communication: Four guiding principles should be communicated to employees on the issue:

1. Intention - was the gift intended to influence the recipient to perform his or her function improperly?

2. Timing - when was the gift made? Was it made at a time immediately prior to an important commercial decision, such as prior to the outcome of a tender process?

3. Openness - was the gift given freely and openly or has any attempt been made to conceal it, and critically does the company require its employees, directors and consultants to record gifts received or given in a gifts and hospitality register? Was there an effective policy in place governing the practice of making and receiving gifts?

4. Reasonableness – simply, would the making or receiving of the gift appear reasonable to an objective bystander?

B. Procedures: Companies should also consider taking the following steps to ensure that expenditure of gifts is proportionate, reasonable and legitimate:

1. Anti -Bribery Policy - all businesses should have an effective written policy in place which strictly prohibits gifts or other expenditure which might influence or be seen to influence a commercial decision or other material issue. Such a policy should also set out upper limit for gifts and expenditure, and include clear reporting lines to specific senior managers responsible for ensuring compliance with the policy.

2. Gifts and Hospitality Register – Document all gifts, hospitality and related expenditure, whether given or received, or refused in a gifts and hospitality register which should be monitored and reviewed by senior management and regular intervals.

Carson McDowell are regularly engaged by our clients to advise and provide training in relation to the Bribery Act 2010 and would be happy to assist.

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