No 5 launches new Bribery Act service

THE days of businesses giving gifts and corporate hospitality at major sporting events could be numbered, a Birmingham-based barrister has said.

The UK Bribery Act 2010, which received Royal Assent in April and comes into force in October, could restrict future corporate entertainment and gift giving, unless businesses can demonstrate they have ‘adequate procedures’ in place to prevent accusations of bribery.

Ekwall Tiwana, a criminal barrister from No5 Chambers, said the whole corporate entertainment sector could now come under the spotlight with large firms facing a crackdown on what they could legitimately do.

Under the Act, even free lunches and Christmas gifts for clients could be interpreted as a ‘bribe’ on grounds of gaining a financial advantage over competitors. Those guilty of breaking the law could face unlimited fines and in extreme cases, prison terms of up to 10 years for both the giver and receiver.

In anticipation of the new legislation, No5 Chambers has launched a new Bribery and Corruption division to advise businesses on potential pitfalls.  

Mr Tiwana said the Act could be especially significant to firms operating overseas where business cultures are different than in the UK.

There are fears that the Bribery Act may stifle international trade as the practice of bunging is an accepted part of many foreign business cultures and used as a valuable sales aid.
 
“There is now clear legislation in place which demonstrates that it is immaterial whether a bribe is paid by an organisation itself or by a third party acting on its behalf.   More importantly, it is the organisation, not the third party, which is accountable for such actions,” he said.

The Bribery Act has also introduced a new offence of corporate failure to prevent bribery, the first time such a law has existed in the UK, and is thought to be an indirect response to a spate of high-profile cases involving British businesses and bribery overseas, which included BAE Systems .

The offence of bribery applies to individuals who offer, promise or give financial advantage to another. Estimates by the World Bank suggest moiré than £1,000bn is paid in bribes every year.  

High-profile sporting events are often seen as an opportunity to win favour with clients but this could change with the new Act.

“Businesses need to take action and carry out risk based due diligence to formulate a policy which sets in stone a code of ethics relating to the giving and receiving of corporate gifts and entertainment. Those operating overseas also need to look at clearly defining the role of third parties acting on their behalf,” said Mr Tiwana.

He said the UK needed to look to the United States for guidance as it had already undergone huge changes in this area with strong anti-corruption legislation now ingrained in the Foreign Corrupt Practices Act.