Law and order

Many in the corporate hospitality industry believe the new Government anti-corruption legislation will not affect them, but without clear guidelines in place it is impossible to tell.

The Government is proposing to put forward legislation recommended by the Law Commission in 1998 to cover the issue of corruption in the next Parliamentary year. The dictionary defines “corruption” when applied to officers, trustees and other professionals as: “… signifying the inducement of a violation of duty by means of pecuniary considerations”.

With regard to anti-corruption within corporate hospitality, the Home Office document outlining the proposals states: “Legitimate business activities such as advertising, marketing, direct marketing and corporate hospitality clearly do not come within the proposed definitions. They aim to influence behaviour by offering advantages, but their activity, by its very nature, is public and not designed to induce someone to act corruptly.”

With at least degrees of disparity evident between the dictionary definition and the proposal, is there then a danger that free lunches could become things of the past?

Skybridge chief executive Randle Stonier says: “The first thing to understand is that most laws dealing with corruption and bribery date back to about 1889 in the UK.

“The Law Commission came up with its recommendations to look at the broad issue of corruption in order to tidy things up a little, as we now have both public and private sector officials and no differentiation between the two. People refer to corporate hospitality as that Ascot/Wimbledon/Henley jamboree, and say it’s all doom, gloom, bribery and corruption.”

With the vast amounts of money spent on corporate hospitality a year, it isn’t surprising that it has been accused of consisting of freebie jaunts enjoyed by corporate fat cats and as an unnecessary and elitist luxury or even a corrupt business.

Skybridge estimates that about &£5m of its annual turnover (20 per cent of its overall business) comes from corporate hospitality-related projects. At the Silverstone Grand Prix alone, corporate hospitality revenue amounts to more than &£4m, with the overall amount spent in one year at the track on corporate hospitality substantially exceeding that figure.

Regardless of the huge sums of money involved, the essence of corporate hospitality is a legitimate and respectable business that looksto confer advantage, to gain advantage or motivate to gain advantage.

Four proposed offences

“We’re endeavouring to get people to do things they may not otherwise choose to do,” says Stonier. “It’s a matter of understanding what’s ethical and what’s not, and it’s a fine line.”

It has yet to be defined in detail in the proposal, but there are four proposed offences: corruptly conferring or offering or agreeing to confer an advantage; corruptly obtaining, soliciting or agreeing to obtain advantage; corrupt performance by an agent or whomever acts as an agent and receipt by an agent of a benefit which consists of or is derived from an advantage which the agent knows or believes to have been corruptly obtained.

As such, Stonier believes, agencies such as Skybridge, and other legitimate companies involved in corporate hospitality will remain unaffected by the legislation.

Enforcing anti-corruption laws

A main concern of Jerry Appleton, manager of corporate hospitality at Silverstone is how the Government can actually enforce any anti-corruption laws it enacts.

He says: “Personnel are constantly changing in this industry, and, as such, corruption is often virtually impossible to detect. Silverstone agents are carefully vetted, and we have made a huge effort to cut out any hospitality that isn’t above board, but it’s impossible to follow it down the line.

“We can monitor who we deal with, but we’ll never be able to guarantee that somebody three or four people down the line isn’t acting corruptly or using it as a bribe.”

This in itself appears to be a legitimate concern, as although most larger companies seem to be honest and trustworthy, there are always exceptions. An ex-employee, who wishes to remain unnamed, of one company that offers corporate hospitality to its clients, recalls less than exemplary techniques employed by some salesmen.

“They’d promise the world, but once the contract had been signed they didn’t care,” he says. “They’d buy tickets from touts outside the gates because they didn’t have any arrangement with the clubs. Their guests would often end up sitting at opposite ends of the football pitch or behind the goalposts, and it was my job to protect the salesmen from angry business people who’d been conned. Much of the behaviour I saw would certainly be described as borderline, if not corrupt.”

Examine cases individually

However, this scenario does not seem to be typical and should not be used as a benchmark for corporate hospitality in general.

Incentive Travel & Meetings Association (ITMA) chairman Roger Harvey says: “The essence of corporate hospitality is to support your marketing efforts, and as long as the hospitality is legitimate, and commensurate with the quality of product you are selling, then it’s not corrupt. It needs to be looked at on a case-by-case basis.”

In that case, it would appear that the Government may have difficulty pinpointing exactly how it intends to define corruption within the industry.

Corporate hospitality, although in need of regulation, does not appear to be in any great danger. Stonier believes that there has never been a greater need for corporate hospitality than in this electronic age, where people have for the most part been reduced to electronic blips on a screen. “Face-to-face communications have become important,” he says.

Personal touch

“We are almost at the point of dehumanising work – we’re in a sterile human environment. By providing corporate hospitality we create a framework that gives people an opportunity to discuss issues that may not come up over an e-mail or a phone. Anything that can help address the emotional capital forms an essential ingredient which has otherwise been lost from work. It’s a trite but true saying that people who play together, stay together.”

How the anti-corruption legislation will be enforced has not yet been revealed, and as such it is impossible for companies to gauge how their businesses will be affected. ITMA’s Harvey believes most businesses, such as Skybridge, will remain largely unaffected by the legislation as its primary influence will be on public companies, not private. “I don’t believe it will be aimed at what we do,” he asserts. “Corruption almost always works on a one-to-one basis, whereas what we do works on a business-to-business basis. On the face of it, the legislation looks as if it will have an impact on companies that offer hospitality, but at the end of the day, how many people will actually sit down and read the legislation in detail? Larger companies that do not have strict rules will look at how their hospitality is run and will have to implement guidelines, but I suspect many smaller companies will not realise the legislation has been passed,” he says.

Government may limit market

“I’m not sure how the Government is proposing to put the legislation forward,” admits Appleton. “How it is worded will make a huge difference to how it affects events such as the Grand Prix. If it’s going to become a taxable benefit it will probably affect us quite a lot, but guidelines won’t impinge on what we do very much. If it is looking at levying charges in terms of corporate hospitality, then government will have to find a way of controlling it first.

“Whenever government tries to influence the market it limits it more often than not. The people who come to Silverstone use hospitality for trade marketing activities, and as long as it is legitimate business, I see nothing unusual or unethical about it. The Government will need to be clear on where it thinks the problem exists if it expects changes to be made.”

It would appear that although most people in the industry agree that regulation of corporate hospitality would be welcomed by most legitimate businesses, the actual definition of corruption within corporate hospitality and implementation of penalties for breaching its code of conduct will be at best difficult, if not impossible to enforce. No dates have been given for the legislation of the Law Commission’s proposals, and it seems the Government may have to spend some time pulling together all the disparate parts of the broad issue that is corruption before it can achieve any concrete guidelines for the industry to follow.

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