PWC XMAS BRIBERY WARNING

14 Dec, 2011

On the first day of Christmas, my supplier sent to me…..

Companies should have an eye to the bribery laws before sending or receiving corporate Christmas gifts this year now that the UK’s Bribery Act is in full force, according to PwC Forensic Services. The Act, which has given the UK one of the most stringent anti-corruption laws in the world, has introduced radical changes which could have a significant impact on corporate gifts to customers and clients, and which could lead to severe penalties for companies that don’t play by the rules.

The Act, which came into force in July and has already claimed its first victim, has made it easier to convict people who pay or offer to pay bribes as well as those who receive or solicit them.

Andrew Gordon, partner and head of investigations in PwC’s forensic services practice, said: “Christmas is the peak season for client and customer entertaining and gift giving but companies would be wise to ensure their policies in this area are adequate and properly enforced.  In the current difficult economic climate, although some companies may have reined in their spending, others may be tempted to bestow lavish gifts in a bid to keep their customers sweet.

“Employees need to be made aware exactly what the rules are around giving and receiving gifts or hospitality.  Companies should also ensure they inform their suppliers of their policy, including publicising it on their website.”

According to guidance from the Ministry of Justice, promotional expenditure which is “reasonable and proportionate” should not cause problems but no monetary levels are indicated.  Instead the onus is placed on companies for the “establishment and dissemination of appropriate standards”.

Andrew continued: “A Christmas food hamper, for example, from Fortnum & Mason costing several thousand pounds would clearly not pass the reasonableness test under the guidance. But
Christmas hampers aside, it’s not generally a black and white area; much will depend on the context and intent of the gift.”  

For example, a Christmas present from a supplier to a client’s employee on retirement is unlikely to cause any problems, on the basis that there can be no intent for the recipient to behave improperly as a result of the gift.  Similarly, a gift from a customer to a supplier in recognition of a job particularly well done should not fall foul of the law.

It is also important to remember that the Act applies to a wide range of people and organisations, including all UK nationals and all organisations which carry on a business or part of a business in the UK, wherever in the world they may be located or incorporated.  

Subject to the above, Santa might have the following reaction to your proposed present list:

Santa thinks you’ve been well behaved this year:
·        Calendars
·        Company logo branded low cost merchandise (USB memory stick, stress ball, umbrella etc)
·        Invitation to a modest Christmas party or lunch
·        Reasonable socialising such as UK sports events, provided the host is present

Santa says “you’d better watch out”:
middot;        Any alcohol above a bottle of wine
·        Overseas sporting events and entertainment
·        Expensive gifts such as gold fountain pens or watches
·         e-book reader e.g. Kindle

Santa thinks you’ve been naughty this year:
·        Lavish food hamper
·        Cases of champagne or fine wine
·        Tickets for the London Olympics when the host is not going to be present
·        Anything delivered to a home address
·        i-Pad 2 or similar tablet computer

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