When does a glass of champagne go from quaffable to criminal? It’s time to take a common sense look at the impact of the new Bribery Act

I hesitate to refer to the new Bribery Act (effective July 2011) as the sexy subject of the day, but it does seem to be capturing the imagination of journalists and lawyers alike, and I don’t just mean in our industry.

It seems to me to be an updating of previous legislation, combined with a fair bit of common sense and is somewhat dismissive of corporate hospitality as an issue. But, today let’s look at what can be defined as ‘reasonable’ and hence unlikely to be ‘criminalised’ – a strange choice of word for the Ministry of Justice!

The regulator is on a roll, producing loads of paper on the subject, but what relevance does it have to the UK insurance broker?

The real key, in my mind, is for the independent broker to maintain independence and not be influenced by baubles or junkets when making recommendations to clients. No doubt most would respond to that with a resounding ‘of course not’, but there is a fine balance.

So, before you think none of this applies to you, think slightly wider.

What is excessive?

Make no bones about it, there’s no altruism in offering corporate hospitality. It’s for one of two reasons: reward – a thank you for past performance; or to influence – with expectation of future performance. The latter seems to me to be more invidious.

We can talk of loans, sweeteners, bribes, all sorts of juicy novella-type words, but let’s get serious. Let’s talk about excessive hospitality.

Fine, a company invites you to a special day, weekend sports event (with or without partner or family) or something even more exotic. Lovely stuff! You may have to sit through a presentation, pore over printed material or talk to the company’s fine-tuned representatives in between having a good time. No problem, provided you make your judgements, later, according to your clients’ needs.

Weekends aren’t necessarily a ‘no no’. With time being so precious, it could be the only occasion suppliers get your undivided attention so, hopefully, this would be deemed to be ‘reasonable and bona fide’.

But, beware becoming a junket junkie. Can you afford, and justify, regular time away from the office? Take care that your staff and clients don’t see mixed messaging of premiums rising, wages held, expenses under the microscope while you enjoy what’s perceived as the good life.

The whats and wherefores

Genuine and reasonable corporate hospitality is not to be criminalised. But what is reasonable and bona-fide? To one man vintage champagne is routine and plebeian, to another it’s pure luxury and largely unattainable.

Okay, so champagne is a minor issue, but what about the place you drink it? Are you talking about a hospitality suite at Lords Cricket Ground serving champagne or a suite aboard a luxury liner taking you and your family to South Africa? Is one bona fide and the other bribery? It will depend on the audience and the purpose.

To reward someone for being a loyal, productive customer seems reasonable and not a bribe. But if the reward is disproportionate, it’s an issue for HMRC as benefit in kind.

I’m not attempting to address the Act’s legal issues, but more to look at the common sense behind it. The regulator dismisses corporate hospitality as unlikely to be criminalised unless it’s not bona fide or reasonable. Let’s hope regulators won’t need umpteen new employees to check on minor issues – which inevitably the broker will have to fund in enhanced fees/levies.

I do sometimes wonder if the powers-that-be appreciate the real value of corporate hospitality.

Anyway, with the fact in mind that freebies, junkets and entertainment could be construed as criminal, I shall consider carefully the next flute of champagne I am offered!

Barbara Bradshaw is chief executive of The Institute of Insurance Brokers (IIB)