Bribery Act Is Greeted with Muted Welcome; Business Lunches and Corporate Gifts Have Long Been Popular Ways to Grease the Wheels of Commerce by Building Contacts and Winning Customers. but Will They Land Bosses in Hot Water under the New Bribery Act? Business Editor IAIN LAING Investigates

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COMPANIES looking to entertain clients via corporate hospitality events will have to take a serious look at their plans to avoid falling foul of new anti-bribery laws which come into force on July 1. The Ministry of Justice this week published detailed guidance for businesses on the Bribery Act and how it affects the activities they carry out.

The Act is intended to replace existing piecemeal anti-bribery legislation with a comprehensive raft of laws to combat corruption.

Among other things, the Act introduces a corporate offence of failure to prevent bribery by persons working on behalf of a business.

As well as including employees, this can extend to agents working in the UK and abroad on behalf of a company.

Businesses have expressed fears that activities which may previously have been seen as standard practice - such as corporate hospitality - may now be potentially viewed as bribery.

But normal methods of entertaining clients will not be outlawed and SMEs only need to put new anti-bribery processes in place if they believe they are at high risk of exposure to bribery - for example, if they carry out a lot of overseas work in countries with a known culture of corruption.

The Ministry of Justice's guidance outlines how companies considering corporate hospitality events may want to consider a range of safeguards to ensure they do not fall foul of the Bribery Act from July onwards.

These safeguards include: ? Conducting a bribery risk assessment relating to a company's dealings with business partners.

Publishing a policy statement committing the company to transparent, proportionate, reasonable and bona fide hospitality and promotional expenditure.

Issuing internal guidance on procedures that apply to providing hospitality and/or promotional expenditure.

Kirsty Gomersal, partner in the regulatory and licensing team at Newcastle law firm Ward Hadaway, said: "Justice Secretary Kenneth Clarke has said that the Bribery Act will not be a major burden or expense on business, but just looking at the example of corporate hospitality shows that there is actually likely to be quite considerable time and expense spent by companies in complying with the new legislation.

"Companies looking to offer corporate hospitality to their clients will now need to be very cautious and to think carefully about what they offer, who they offer it to and why they are offering it.

"Similarly, people who receive corporate hospitality invitations will need to carefully consider the nature of those invites and how they tally with their organisation's anti-bribery procedures and policies.

"The net effect of this may be that companies will simply stop offering corporate hospitality. Anecdotal evidence suggests that some businesses are already refusing to let their employees accept any hospitality - even a sandwich or a short lunch - while other organisations are putting strict limits on accepting hospitality, such as a maximum of pounds 50 per person.

"This may not have been the intention behind the introduction of the Bribery Act, but the reality is that many organisations simply do not want to take any chance when it comes to complying with the new legislation."

The Bribery Act does not prohibit corporate entertainment and gifts which are acknowledged to be an accepted part of business practice. However, companies must ensure that such hospitality is for a legitimate business purpose, is proportionate and at a level where it cannot be inferred that the hospitality is intended to bribe a recipient.

Gomersal said: "Companies therefore need to carry out advance planning well before sending out invitations to ensure they are satisfied that the entertainment could not fall foul of the new legislation.

"This advance planning will take time and effort, but the cost will be undeniably less than dealing with an investigation by the Serious Fraud Office - or even prosecution. …