Does the Bribery Act, which comes into force next April 2011, mean the end of corporate hospitality? If so it will certainly hit the media industries harder than most, and yet the ad world has yet to really get to grips with the implications of this new legislation.
It is not that the industry is corrupt or based on back handers but simply that the media world flourishes in environments of congeniality and entertainment. However it seems the days when Lord Bell, (the famous MD of Saatchi and Saatchi in the 1970s), boasted of spending hundreds on caviar for his clients at one lunch alone, may be unwise in the future. While the Act is not intended to stop a free lunch the penalties for infringing one of the four offences are severe, and likely to focus the minds of any board of directors. There will be the possibility of a maximum jail term for bribery by an individual of 10 years and a company convicted of failing to prevent bribery could receive an unlimited fine.
Draft guidance published by the Ministry of Justice in September has only made matters worse. The Guide suggests that all businesses will have to keep records of the hospitality staff receive and hand out.
The Telegraph described the proposals as an ‘administrative nightmare’. While intended to focus on bribes to foreign officials the Act also applies to all British businesses, small or large. There is enormous criticism of the Guidance and calls for clarifications have been made prior to the Act coming into force in April.
Reed Smith support PACT (the Producers Alliance for Cinema and Television) in its call for the MoJ to clarify when a payment may be in the public interest, for example when paying a bribe in a foreign country to gain access to areas needed to carry out investigative journalism. PACT even point out that in some circumstances lives depend on bribes to get journalists and film makers out of difficult and frequently dangerous situations. However other times the reality is more mundane but equally valid, filming in some jurisdictions will just not happen unless the ‘local wheels of business’ are oiled sufficiently. Try shooting an ad in some parts of India for example.
So what does the Act cover?
The main elements of the 2010 Act are that it is an offence to:
- give or receive a bribe
- promise, offer, request or agree to receive a bribe.
- bribe a foreign public official
It is worth noting is that public and private sectors are covered and that is a senior officer consents or connives to (i.e., turn a blind eye to) the commission of any of the above offences, then they too are guilty of the offence. The Act applies to all UK businesses.
There is also the new corporate offence referred to above for businesses that fail to implement adequate preventative procedures where an act of bribery is committed in connection with its business. There will also be other consequences associated with any conviction under the Act, including the disqualification of directors; prevention from public procurement bids and the confiscation of assets.
Agencies, advertisers and media owners will need to put in place monitoring systems. Training senior staff will be crucial. Naturally not all businesses face the same level of risk. Media businesses need to analyse the risk and put in place proportionate procedures. Agencies should consider a limit to the value of corporate entertainment and gifts as it needs to be remembered that the recipient may have to disclose the gift if it is significant.
In the meantime the consultation on the MoJ guidance closes on the 8th November and one hopes for better clarification of issues in the next guide to be published before the Act comes into force.