A football match with a client, ‘thank you’ wine from a supplier, dinner with a potential customer – all run of the mill in the print industry. But could the new Bribery Act render these seemingly innocuous gestures illegal? If recent media coverage is anything to go by, you might think so. Some reports have implied the act will sound a death knell for corporate hospitality – a key business tool in the print industry.

For those who have missed the hype, the Bribery Act 2010 came into force on 1 July this year and made it an offence to give or receive bribes in business.

A bribe is basically giving someone a financial or other gift with the intention of inducing them to "perform improperly a relevant function or activity". Philippa Dempster, commercial partner at law firm Freeth Cartwright, explains that "performing improperly" would translate as, "their normal business decisions being clouded".

The purpose of the act is to tackle serious corruption but UK businesses have been concerned that corporate hospitality could get snared up in the legislation if it were to be seen to influence business decisions.

While it’s already an offence to bribe public sector workers, interactions between private businesses have not been subject to such laws until now. And although any respectable businessperson would be disgusted by a blatant bribe, many see hospitality as vital and would be reluctant to give it up.

In the print industry, hospitality is essential to many businesses. Ricoh UK sponsors several major sporting events, which are used as opportunities to entertain clients. "Corporate hospitality gives you a chance to actually build a relationship," says Chas Moloney, marketing director for Ricoh UK. "When you’re in the business environment, time is precious, so you never get a chance to understand fully what the client wants." Printflow’s commercial director Paul Manning similarly regards their smaller-scale hospitality as "an integral part of business."

Unfounded fears
It’s welcome news, then, that the act may not pose the threat to hospitality initially feared. The concerns from businesses delayed the legislation’s implementation (it was due to come into force in April 2011) and in response, the government produced further guidance on the act, stating that it did not expect "genuine hospitality" to fall under it.

"Normal levels of hospitality are fine," explains Dempster. "But it’s all to do with scale. Having a business meeting over lunch is one thing. Taking clients to a high-profile event that costs thousands is another. If you’re going over the top, it raises questions." So putting a cap on entertaining budgets is wise to preclude accusations of bribery.

"Hospitality might also come into question if you do it at a time which might be seen to induce somebody to enter into a deal," adds Dempster, "For example, if you’re tendering, you shouldn’t really be engaging in hospitality with that organisation at that time."

Other key considerations are ensuring that it’s clear that hospitality comes with no strings attached and that there’s always an evident business value in it.

The act and the industry
The general feeling in the print industry is that – if this is all adhering to the act requires – it won’t make a huge difference to businesses. "If this act came in 20 years ago it would’ve changed the industry," says Manning, "Back then, hospitality was much more excessive, but times have changed."

He cites several reasons for this: the trickle-down effect of tighter rules in the public sector; the advent of more structured tender processes; the spread of power in companies so there’s no one obvious target to schmooze. Managing director of Webmart Simon Biltcliffe adds, "People don’t have the time they had before to take days out. There’s no slack in organisations."

The consensus is that – act or no act – these days there are certain "unwritten rules" on how businesses operate. Among other things, you don’t engage in hospitality around the time of tender processes and you avoid excesses.

Ignorance isn’t always bliss
The fact that the act doesn’t seem set to revolutionise the industry means some are apathetic towards it or ignoring it completely. "People get fed up of there being more and more legislation to follow," notes Dempster. But she warns that all companies should take the time to familiarise themselves with the act and reassess normal practices in light of it, as the consequences of falling foul of the new legislation are not insignificant. Penalties include up to 10 years in prison, an unlimited fine, and forfeiting the value of any contract obtained by bribery.

The act doesn’t just target rogue individuals either – businesses will commit a crime if they fail to prevent bribery by anyone performing services for them, including employees in and out of house.

The only defence for companies in cases where an employee is found guilty of bribery is to show that adequate bribery prevention procedures are in place from the top down. "To rely on this defence, businesses need to do a risk assessment and in light of that put together an appropriate anti-bribery policy and give their staff training," says Dempster. "A written policy is best because it’s ‘evidence’ that could be used to defend the business if necessary." It’s also good practice to include obligations to comply with anti-bribery legislation or policies in contracts with suppliers.

The guidance on the act is realistic, though. Companies will only be expected to have taken all reasonable measures to check the next contractors in their supply chain comply, not everyone connected to the business, no matter how distantly.
Taking these measures to come in line with the act won’t necessarily be costly, says Dempster. "Larger businesses tend to have HR and legal teams so it becomes part of their remit," she explains. Moloney notes this was the case at Ricoh UK, where the firm’s in-house legal team took charge of checking its pre-existing code of conduct covered everything in the act.

However, without legal teams to help, some smaller companies complain of a lack of information about what they need to do. "Despite being based in this country’s commercial centre, we’ve had no information on the act other than through the media," says Manning. "So maybe there should be more coming through, even just a letter."

On the upside for smaller firms, though, is the fact that while they might not have HR teams to help, their ‘training’ might amount to simply sending an email around the office. Guidance on the act states that the scale of the policy and training need only be proportionate to the size of the company and the potential risk therein.

All smoke, no fire?
While the Bribery Act might not be entirely groundbreaking, abiding by it isn’t necessarily a cinch. UK companies that employ people abroad will be held accountable if those employees commit bribery, even outside the UK. "If you’re trading in China, India and other foreign countries, their practices often involve some sort of payment in order to facilitate business. It’s going to be hard for our businesses to comply with the act out there," says Dempster.

Another concern is a sense that there are "grey areas" in the legislation. "It’s very clear what you can and can’t do," says Moloney, "But there are some areas in the middle that are open to interpretation."

In particular, the guidance isn’t very clear on what would be deemed "excessive" hospitality. "It just says ‘what’s reasonable in your industry’ and it can be quite hard to work that out," says Dempster. So for now it may be advisable to proceed with caution.

Despite these sticking points, though, most in the industry see the act as a positive move. "It’s giving out the right signals," says Manning. And Biltcliffe adds, "I think anything that fosters transparency and a level playing field can be nothing but good."

Still, whether any real impact will be felt in the industry remains to be seen. "It usually takes about a year to 18 months for cases to come through," says Dempster, "And if fines are handed out, others will take notice." In the meantime, in the world of print hospitality, it seems that it will be a case of ‘business as usual’.

BRIBERY ACT: THE ESSENTIALS
• Companies should develop an anti-bribery policy covering areas of risk to which they may be exposed, including hospitality. This should include a limit on the level of hospitality (judged against the industry norm) and guidance on appropriate timing of hospitality, avoiding the time around tendering
• Policies should be communicated to staff and anyone else who performs services on behalf of the company
• Employees should be given any necessary training – anything from an oral briefing to formal workshops, depending on the size of any perceived risk in individual companies. Training should be repeated periodically
• Companies should include anti-bribery obligations in their contracts
For a free information pack on how to come in line with the Bribery Act, email philippa.dempster@freethcartwright.co.uk

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