The act has been introduced to prosecute companies for bribery more effectively. There was widespread business and media concern that the act would severely restrict corporate hospitality. But Government guidance, released at the end of March, said this should not be the case as long as the hospitality was reasonable and proportionate.
Why should PROs care?
There is a possibility that the offer of hospitality or entertainment for clients could be interpreted as a bribe.
What currently happens?
In order to prosecute a company, the prosecutor would have to prove that senior members in the company were the directing minds behind the bribing incident.
What will change?
The burden of proof will change. Companies will have to prove they had adequate measures in place to prevent bribery in order not to have committed an offence. People can be prosecuted for both giving or receiving bribes such as gifts or corporate hospitality that are exceedingly lavish and disproportionate, where the intention is to bring about the improper performance of a relevant function or activity.
Key quote from the Government's guidance
'An invitation to foreign clients to attend a Six Nations match at Twickenham as part of a public relations exercise designed to cement good relations ... is extremely unlikely to be evidence of an intention to induce improper performance of a relevant function.'
The overseas actions of UK companies are also covered by the law. While local customs may vary from the UK landscape, the fact that an action is acceptable as a local custom is not a defence. For example, the practice of giving Chinese journalists 'taxi money' in order to attend an event may not be lawful under the act if this constitutes 'improper performance'.
A practical example
Taking journalists on luxury travel press trips is acceptable because it is a way of better demonstrating a product. What would be more risky, says Addleshaw Goddard's partner Ian Hargreaves, would be drug companies taking potential buyers to Australia to demonstrate a new drug 'when there is no connection or need to have such an event in Australia.'
HOW I SEE IT: THE LEGAL VIEW
Ian Hargreaves, Partner, Addleshaw Goddard
My advice for the PR industry is not to panic. There has been a lot of hysteria over this new act. Most of it is unfounded. The Government has made it clear it does not want to prohibit reasonable and proportionate corporate hospitality, although one should bear in mind it will be the courts that apply the act.
It is sensible for PR professionals to look at their gifts and corporate hospitality policies. Setting up a register, in which the amount being spent, those giving or receiving the gifts and hospitality, and the reason for the gifts or hospitality are recorded, makes sure everything is open and transparent.
There should be some connection between gift or hospitality and what someone wants to achieve from it. Using gifts or hospitality as an attempt to better present a company or product is acceptable, as is building 'cordial relations', so long as such gifts or hospitality are commensurate or appropriate in all circumstances.
HOW I SEE IT: THE ACADEMIC VIEW
Liz David-Barrett, Research fellow, Oxford University Centre for Corporate Reputation
In the period after the act was passed, there was concern that PR activities intended to maintain a relationship with clients might come under threat. The indication is that this was an overreaction, but there may be situations where a competitor could report you to the authorities.
Companies are likely to be more cautious about the hospitality they provide. The act gives companies who wanted to cut back on this anyway with an excuse to do so.
The timing of gifts or hospitality will be important. PR professionals should be considering at what point in client relationships they are providing hospitality. Providing a lot of hospitality when bidding for contracts may raise alarm bells, and look like an attempt to influence the person who could potentially award a contract.
Companies are also responsible for third parties and agents. If you are using contractors, say to arrange a press conference, you need to make sure they are not offering any inducements for people to attend or to write about you favourably.
Main image from Rex