Because of the visibility and price tags surrounding the Olympic Games that kick off next month, London 2012 may be a high-profile test case for the U.K. Bribery Act’s application to corporate hospitality expenditures. The Bribery Act, which took effect in July 2011, makes it illegal for commercial organizations to fail to prevent bribes from being paid on their behalf in order to obtain or retain business or a business advantage.
Since Parliament passed the act in 2010, the U.K.’s Serious Fraud Office (SFO) has made clear that “sensible and proportionate” corporate hospitality expenditures are allowed under the act, and that it recognizes the importance of business entertaining.
Unlike the U.S. Foreign Corrupt Practices Act (FCPA), the Bribery Act covers bribery to government officials as well as commercial bribery. But similar to the FCPA, it generally has extraterritorial reach, applying to companies that do any kind of business in the U.K. (It’s not limited to conduct that takes place in the U.K., either.) Companies charged under the FCPA can assert a statutory affirmative defense regarding reasonable corporate hospitality expenditures. The Bribery Act provides no such affirmative defense, which initially made hospitality expenditures one of corporations’ major concerns about the act.
The U.K. government has stopped short of setting specific boundaries on corporate hospitality expenditures.