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April 10, 2011

New Bribery Act Forces Hospitality Rethink

UK companies in the hospitality and leisure sector may need to review their perk and kickback policies before the new Bribery Act comes into place on 1 July 2011. The Ministry of Justice is enforcing the Bribery Act 2010, which includes a more comprehensive list of offences to ensure b

By cms admin

UK companies in the hospitality and leisure sector may need to review their perk and kickback policies before the new Bribery Act comes into place on 1 July 2011.

The Ministry of Justice is enforcing the Bribery Act 2010, which includes a more comprehensive list of offences to ensure bribery is effectively and appropriately addressed at home or abroad.

Deloitte’s Forensic & Dispute Services team partner Peter Maher said there are a few obstacles for the hotel industry to face when the legislation comes into effect.

“The anti-bribery policy of two years ago may not address the new risks so you do need to have that reviewed,” he said.

One of the challenges Maher highlights is for those who operate in countries with a high propensity for corruption.

He said companies will need to interact with government officials to get permits and licences in countries where there is an expectation for bribes to be paid in order to obtain them.

Another issue was the distinction between hospitality and bribes, though Maher said that this is made clearer in the Act’s guidelines.

“It now appears that business-as-usual entertainment would not fall foul of the act and it is quite explicit in that regard; however, companies or providers of entertainment will soon need to be on their guard to ensure that the provision of hospitality or entertainment doesn’t contravene the Act,” he said.

Mahler does, however, acknowledge the difficulties in distinguishing between hospitality and bribery.

“It’s not a monetary test, it’s more a test of intent as to what the purpose of the entertainment is and, as in a lot of these cases, the evidence will be circumstantial as opposed to direct,” he said. “It’s a fact of the circumstances that you can’t just have a table to explain ‘if it’s this size room it’s OK; if it’s a bigger room, it’s not’ – it’s just not that simple.”

Kenneth Clarke, UK Lord Chancellor and Secretary of State for Justice, said: “The ultimate aim of this legislation is to make life difficult for the minority of organisations responsible for corruption, not to burden the vast majority of decent and law-abiding businesses. We are not going it alone in pursuing this objective, but working in tandem with our partners in the OECD, Europe and the US.”

Maher welcomes the new legislation. “The UK now has some of the most stringent anti-corruption legislation than anywhere in the world,” he said. “I would say we really are top of the tree really in seeking to eradicate corruption.”

By Rebecca Edghill

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