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Breaking Bread – why agencies shouldn't be afraid of the bribery laws when entertaining clients

By Kevin Gallagher

May 22, 2014 | 6 min read

It seems The Drum is as usual setting the news agenda – three weeks into our 10 week series on next generation client entertainment, we found Tuesday's (20th May 204) Evening Standard piece on the return of client entertainment under the new manners of the Bribery Act very interesting indeed.

This week, we sign-off on the subject with a Bribery Act Q&A from the marvellous legal eagles at Sheridans – a Soho-based law firm specialising in advising media and creative businesses. We appreciate the legal advice of Messrs Ray Wann and John Haggis, providing clarity on the tricky subject of how firms are interpreting the Act, and the impact this is having. The point of this column is a belief that many firms are absolutely missing the point of the Act: it is to prevent bribery, and is categorically not about limiting a firm’s ability to thank or get to know their clients, or to achieve a high profile for their products or services

Q1: How is bribery defined? We are a medium-sized full service agency and are currently reviewing our all company policies, mindful of a future sale of the business.

A bribe is defined under the Bribery Act 2010 as being a financial or other advantage which is 'promised, offered or given' by one person to another, and to induce the recipient to either perform an activity improperly, or to reward them for doing so. A bribe can take place at any time, even if it is given or paid after an event. It is important to stress that a bribery offence can take place even where only the offer is made and no cash or gifts have exchanged hands – the bribe does not need to be successful. Liability rests with the person offering the bribe and the person accepting it.

Q2: We are in the middle of planning a client event, with gifts for each attendee. Does the Bribery Act mean we have to worry about our client entertainment or providing gifts?

No. The purpose of the Act is not to prevent genuine hospitality or similar business expenditure provided it is reasonable and proportionate for the business in question. While there will be arguments over what is 'reasonable and proportionate' for any given business, the actual elements of bribery under section 1 of the Bribery Act 2010 still need to be satisfied. Although the Act itself is drafted widely, business can take comfort from the guidance published by the Ministry of Justice, which states in the foreword that providing genuine client entertainment and hospitality is not intended to be within the scope of the Act.

Q3: Every year our PR firm sends Christmas hampers to our biggest clients. Does this now fall foul of the new law? Can companies no longer send gifts?

The answer will largely depend on the individual facts, but the timing and proportionality (e.g. value) of the gift is key. If gifts are given at recognised times during the year, for example a chocolate hamper at Easter, or are of small commercial value, they are likely to be reasonable and proportionate. Giving gifts, for example, before a client pitch would be questionable, but gifts which are reasonably to be expected and within the norms of the relevant industry sector should be seen as reasonable and proportionate. A gift of high value also would raise eyebrows – while it will generally be permissible to send flowers or alcohol as a 'thank you', a luxury holiday or designer clothing as a "thank you" is likely to be viewed as extravagant and will therefore attract scrutiny.

Q4: We have a very strict anti-bribery policy in place, our firm is US owned, but what about a rogue employee, how can we defend against that?

Employers are vicariously liable for the acts of their employees and other 'associated persons' (consultants, agency workers etc). However, the Bribery Act acknowledges that it would be unreasonable, prima facie, for employers to be liable for rogue individuals especially where the employer has minimal control over whether they offer or accept a bribe. This 'adequate procedures' defence is articulated in Section 7(2) of the Act. Where an employer can show that they have adequate procedures in place designed to prevent bribery, they are unlikely to be liable for the bribery offence. There is no set definition of 'adequate procedures', but there are numerous guidance papers from the Ministry of Justice, the British Standards Institute etc, as well as plain common sense policies.

So, it seems common sense is a large part of the solution to staying on the right side of the law, plus an awareness around timing and value. In our discussions with Sheridans they also sensibly suggested that companies should provide some plain English training on the Bribery Act, especially those involved in corporate event sales. Perhaps those involved in inviting clients should also bone up on the subject to help address any concerns at the other end of the invitation.

The media industry may well be dominated by the behemoth global firms, but it thrives also on the genius of many smaller players. Sheridans advise all employers to provide written clear guidance on hospitality and gifts as part of their handbook – which can then be shown as examples of the procedures put in place should they ever need to rely on a defence.

We say, get out there and get to know your clients, get your business known and become known yourself. If you or your company are not out there, you can be certain that your competition is.

Next week, we hear from industry leaders and the new generation about how they feel client entertainment is changing, and what they do to get their message out. See you next Thursday.

In the meantime, check out the Twenty Rather Good Shouts for client dining courtesy of Mr. Sykes Modern Concierge.

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