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Ernst & Young recently carried out a survey among middle
managers and found that many consider any spending of more than
£100 per person "lavish". It is, therefore, not
surprising that 58% of those surveyed said that they would like
more clearly defined financial limits on hospitality
expenditure.
At the minute, some businesses can rely on industry codes to set
out corporate hospitality costs - such as the Eucomed Guidelines on Interactions with Healthcare
Professionals - but in the main, the majority of companies set
their own internal limits, and some still leave hospitality
expenditure decisions up to individuals within the
organisation.
At present there are no published financial guidelines, either
from the Ministry of Justice, Serious Fraud Office or the Scottish
Serious and Organised Crime Division as to what constitutes lavish
expenditure that would give rise to the inference that the
hospitality offered is a bribe.
The lack of set financial limits means that businesses are often
operating in a grey area - with some opting for a zero tolerance
approach and very strict financial limits, while others are
choosing to continue their previous levels of hospitality spending
without any review of the process. It is therefore seemingly
inevitable that the survey found that 68% of middle managers said
the Bribery Act's more restrictive rules on hospitality
expenditure "had either made no difference or they were
unaware of any significant reduction to their hospitality
spend".
We may have to wait for the decision of the courts to rule on
what hospitality is 'proportionate' under the Bribery Act,
before we have a clearer understanding of what monetary limits
should be set on corporate entertainment. In the meantime
businesses should look at:
the intended business purpose of the entertainment;
the relationship between the parties and the circumstances
surrounding the entertainment; and
the reasonableness of the entertainment as seen by the ordinary
UK person in order to make a proportionate assessment of the value
versus benefit of the hospitality.
At the time the Bribery Act 2010 Guidance was produced, the
Government was at pains to highlight that the key message in
relation to expenditure around entertainment and hospitality was
that of proportionality. Kenneth Clarke, the then Home Secretary
said in his introduction to the Guidance, "rest assured no one
wants to stop firms getting to know their clients by taking them to
events like Wimbledon or the Grand Prix". He was obviously not
of the opinion that a £100 spend per person on hospitality is
"lavish".
The material contained in this article is of the nature of
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matter. Recipients should not act on the basis of the information
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