With the London 2012 Olympics fast-approaching, many corporations are wondering whether they can provide corporate hospitality packages to their current and prospective customers, suppliers and business partners without the risk of violating the UK Bribery Act. The UK Bribery Act ("the Act"), which came into effect on July 1, 2011, applies to all organizations incorporated or formed in the UK, or conducting all or part of its business in the UK. Thus, the Act has both a domestic element and a global reach into foreign companies with UK interests that may view the Olympic Games as a business opportunity to entertain business clientele. In a commercial context (i.e., not involving foreign public officials), the Act criminalizes the provision of a financial or other advantage to another person that was offered or provided with the intention of inducing the recipient to perform a relevant function improperly or with the knowledge that the acceptance of the advantage would in itself be improper performance. Under the Act, improper performance of a function is conduct which amounts to a breach of a reasonable person in the UK's expectation that a person will act in good faith, impartially, or in accordance with a position of trust. Bribery in both the public and private sectors is covered by the Act. The Act also holds companies strictly liable for failure to prevent bribery by an associated person, unless the company can show that they had adequate procedures in place to prevent the bribery.

Although at first blush the Act appears to be so broad and harsh that providing or accepting corporate hospitality might infringe the Act and therefore be illegal, Guidance provided by the Ministry of Justice makes it clear that the Act is not intended to penalize expenditure on corporate hospitality for legitimate commercial purposes.1 Specifically, the Guidance states that "Bona fide hospitality and promotional, or other business expenditure which seeks to improve the image of a commercial organisation, better to present products and services, or establish cordial relations, is recognised as an established and important part of doing business and it is not the intention of the Act to criminalise such behaviour." The Guidance further notes that the Government does not intend for the Act to prohibit "reasonable and proportionate hospitality." However, the more lavish the hospitality provided or the higher the expenditure in relation to travel, accommodation or other similar business expenditure, the greater the inference is that the provision of such benefits was intended to improperly influence the recipient. Therefore, although the Guidance makes clear that companies should rest assured that no one is going to try to stop businesses from getting to know their clients by taking them to events like Wimbledon or the Grand Prix, companies must carefully consider the cost involved with entertaining business clientele with corporate hospitality packages to attend the Olympic Games.

Certain hospitality firms, such as CoSport, have been authorized to sell corporate hospitality packages to the London Olympic Games, which include various ticket packages and hospitality services. A review of the corporate hospitality packages being offered by CoSport for the London 2012 Olympics reveals that even the most modestly priced package, which includes hotel accommodations at the Holiday Inn Kensington Forum for three nights, daily breakfast during the hotel stay, a single day pass to enjoy "exquisite food, beverage and entertainment" in CoSport's Olympic expo, pre-selected tickets to daily events, such as rowing, archery and tennis, and a gift to commemorate the individual's attendance at the historic games, costs $6,824.00 per person. A premier hospitality package, which includes a four night stay at the Park Plaza Westminster London Hotel, daily breakfast during the hotel stay with one lunch and two alcoholic beverages, a single day pass to enjoy "exquisite food, beverage and entertainment" in CoSport's Olympic expo, sightseeing excursions, ground transportation to and from the airport and the hotel and sporting and non-sporting venues, pre-selected tickets to events such as volleyball, swimming, basketball, rowing, and gymnastics, and a commemorative gift, costs $18,041.00 per person - clearly, a far cry from the cost of a Wimbledon or Grand Prix ticket. Then, there's the $43,439.00 per person cost reported by the UK's DailyMail for a corporate hospitality package to attend the men's 100m final, where the world record holder Usain Bolt will compete. And if that isn't costly enough, according to DailyMail, you must place an order for a minimum of ten people to guarantee a seat to watch the men's 100m final, which amounts to a total cost of $434,239.00.

Ultimately, the Guidance makes clear that logical common sense must dictate whether a particular provision of corporate hospitality is "reasonable and proportionate," and thus, permissible under the Act. Given the cost of the London 2012 Olympic hospitality packages discussed above, it is highly likely that the provision of premier hospitality packages, and certainly, a corporate hospitality package to attend the men's 100m final, would be considered lavish entertainment intended to induce improper performance. On the other hand, it is conceivable that the provision of a more modestly priced hospitality package, while arguably still expensive, would constitute reasonable and proportionate hospitality when offered for a bona fide purpose. Since the Guidance to the Act has stressed the importance of "top level commitment" in the prevention of bribery, corporations should appoint a senior figure, such as the company's Compliance Officer or Ethics and Compliance Counsel to make the determinations regarding the provision of corporate hospitality packages and to monitor and maintain the records pertaining to the hospitality provided. Accuracy and transparency are vital, so it is critical that corporations seeking to provide corporate hospitality keep diligent records of the events hosted or sponsored, including those in attendance, the reason for the company's involvement, and the legitimate business reasons for entertaining the client or customer. Moreover, heightened scrutiny should be given to the provision of hospitality packages to new or potential customers, suppliers and business partners, since it is far more likely that the provision of a reasonably priced Olympic hospitality package to an existing customer as a token of appreciation for previous business (particularly if it is consistent with - i.e., similar in value to - hospitality provided to the customer in prior years) would be viewed as legitimate as opposed to undue influence to obtain business from a potential customer.

The bottom line is that companies should not view the UK Bribery Act as a blanket prohibition on corporate hospitality, including the provision of hospitality packages to the London 2012 Olympics. Rather, corporations should carefully review or develop broad corporate hospitality policies for their businesses to ensure that adequate procedures are in place to prevent bribery and that crystal clear parameters are set forth regarding acceptable and legitimate business aims for the provision of corporate hospitality.

Footnote

1. See www.justice.gov.uk/guidance/making-and-reviewing-the-law/bribery.htm

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