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The Bribery Act 2010 - will 2011 be the end of corporate hospitality?


The Bribery Act 2010 is due to come into force in April 2011. The new Act came about following international agreement within the UN and also influences from the wider global economic community that bribery is an issue to be addressed, particularly within a commercial context.

The most notable provision of the Bribery Act 2010 is contained within Section 7, which creates an offence of failing to prevent bribery on the part of commercial organisations. The aim of this provision is to ensure that business transactions are carried out with good faith and transparency.

There will be a statutory defence within this section where commercial organisations can demonstrate that they have put adequate anti-bribery measures in place to prevent persons associated with the organisation from being involved in incidents of bribery on its behalf. The legal burden of proving that the defence applies will lie with the organisation itself, to be proved on a balance of probabilities.     

The Secretary of State has issued guidance on the new Act, clarifying that it is to apply to all commercial bodies and partnerships operating within the UK, whether incorporated in the UK or not. Similarly, the Act will apply to organisations with agents operating overseas.

Neither the guidance nor the Act itself set out exactly what measures should be put in place by organisations in order to avoid liability under Section 7. However, it is made clear that procedures should be embedded into everyday business and that all persons associated with the organisation should be familiar with and carry out the provisions put into place.

Particular emphasis is given to the importance of all persons associated with the organisation being familiar with measures put into place relating to corporate gifts and hospitality. In reality many commercial organisations may already have measures in place in light of due diligence requirements, money laundering regulations and professional regulatory bodies and so the new legislation may have limited effect.

Indeed, the Secretary of State’s guidance suggests that organisations may wish to consider how existing measures can be used for bribery prevention purposes.

Examples of how organisations may utilise existing measures include appointing a person responsible for preventing bribery in the company memorandum and articles of association, or alternatively including a provision relating to bribery prevention within contracts of employment.  

Initially the Bribery Bill included a provision that an organisation may avoid liability if a ‘responsible person’ was appointed to prevent bribery. Interestingly, this provision is not included in the Bribery Act 2010 and is replaced with the more general requirement that commercial organisations put adequate anti-bribery procedures in place. This may well be to avoid organisations trying to discharge their own criminal liability and attach it to the ‘responsible person’, making commercial bodies more accountable.      

Where anti-bribery procedures are put into place by organisations and despite this, incidents occur with persons connected to the company, it is suggested in the Secretary of State’s guidance that a senior manager of the organisation should take the decision on whether to report the incident or procedural failing to the appropriate law enforcement agency. 

Criticism of the new law includes that the Act can find organisations liable on procedural inadequacies even if there is no evidence of corporate intent to bribe[1].

The Serious Fraud Office is due to publish its guidance on what adequate bribery prevention procedures will be in early 2011. Richard Alderman, Director of the SFO has commented on the impact of the Act on corporate hospitality ahead of publication, reassuring that “sensible and proportionate expenditure on hospitality will remain perfectly lawful”.

It will be interesting to see what guidance the SFO issues in relation to corporate hospitality and major sporting events, given that the London Olympics are due to commence in the summer of 2012. It will therefore be important for any bodies intending to use the Olympics as an opportunity for corporate entertaining to have adequate procedures in place beforehand in order to avoid criminal liability.  

We can offer tailored advice aimed at preventing bribery prosecutions by reviewing company memorandums and articles of association, reviewing contracts of employment and can advise on how best to meet the requirements of the Bribery Act 2010.

Alternatively, we can offer expert advice to both individuals and companies who find themselves facing investigation or prosecution under the Bribery Act 2010.


[1] “UK Ant-Bribery Law: Big Risk to Business”, The Telegraph, 6 Dec 2010. 

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