A time for giving?

Following the unwelcoming discovery of the Omicron variant - and according to most national newspaper front pages - it is looking highly likely that businesses and employees are set to miss out on another year of Christmas celebrations and corporate entertaining.

With many still wanting to show their appreciation for the work that’s been done this past year, it is expected that corporate gifting will fill this place. But what are the rules when giving someone a Christmas gift from your business?

It is just over ten years since the Bribery Act was introduced by Parliament with the aim of clearly defining the parameters of corporate hospitality. The 2010 Act set out to help commercial organisations understand the procedures they can put in place to prevent bribery, with the assertion that corporate gifting must be proportionate and reasonable. And for companies who get this wrong, the costs can be considerable.

The Bribery Act defines bribery as giving or offering someone a financial or other advantage with the intention of inducing them to act improperly.

Since its introduction, the Act has been firmly enforced by the Serious Fraud Office, who have shown an increasingly tough attitude towards tackling corruption and even the smallest companies can feel the force if they do not have the right safeguards in place.

One of the biggest penalties seen for a conviction under the legislation was issued to the energy company Petrofac earlier this year. The company was ordered to pay £77 million in penalties after admitting to seven charges of failing to prevent bribery in the Middle East, which saw executives paying £32 million in bribes to help the business secure more than £2.6 billion of oil and gas contracts.

Other companies have faced similar fines, with some paying even larger sums after reaching deferred prosecution agreements with the Serious Fraud Office to avoid conviction.

A key takeaway from this is that as well as the individual offences, the legislation makes it an offence to fail to prevent bribery; this means a commercial organisation could find itself guilty of an offence if a connected person – such as an employee or an agent – commits an individual bribery offence.

To avoid prosecution in this way, the company must be able to demonstrate that it had no knowledge the offence was taking place and show they have adequate procedures in place to guard against bribery, for example, they perform due diligence.

Our Managing Partner Mike Leeman said that companies should be wary of lavish gifting as ‘even where no contracts are up for grabs in the immediate future, it could be interpreted as undue influence.’

He said: “Something as simple as record-keeping could save a business from an unwanted visit from the Serious Fraud Office; asking staff to record anything they receive, whatever its value, is the most sensible approach. Ultimately, it’s not just about what is gifted - it is also a good idea to remind staff of policies to keep them aware of the importance of protecting the company against claims of wrongdoing.”

If you or your company are considering corporate gift-giving this Christmas season, we recommend offering something that has a clear business development opportunity for the company, like a company-branded gift, because as nice as it may be a case of champagne probably won’t pass the test.