£100 is 'lavish' hospitality, says survey

In the wake of the Bribery Act, most managers think that anything over £100 is 'lavish' spending on clients. Have we seen the last of the big spenders?

by Michael Northcott
Last Updated: 19 Aug 2013

A new Ernst & Young study reckons that managers see anything more than £100 per head in a corporate hospitality event as ‘lavish’ spending, although the report doesn't specify what proportion of managers think this. The use of the word 'lavish' is interesting, given that in the Bribery Act, it is this word which determines whether the spend has crossed the line into corruption. Yet £100 certainly won’t get a whole board out to a yacht in Monaco…

The Bribery Act was introduced to prevent companies from swaying clients and contacts using extravagant gifts and hospitality. Yet, according to E&Y, only 18% of companies have actually reduced the amount of corporate entertaining they do since the legislation took effect. Eight course meals at the Savoy and the cheeky corporate visit to Spearmint Rhino still on the cards, then…

The findings come just ten days after E&Y revealed that almost three quarters (72%) of managers were unaware that the Act even existed. Of the 28% that did know of it, little more than half (55%) felt they had received adequate training on the subject. But part of the problem is that Bribery Act itself is a nebulous thing. It does not set any monetary limits on how much can be spent per person, and cases brought before the courts are judged on the context and circumstances as well as the cash value of the entertainment, to determine whether anyone has been offering ‘lavish’ treatment. So it is perhaps unsurprising that this latest study also found 68% of middle managers said the tighter rules on entertaining had either made no difference or they were unaware of any significant reduction to their hospitality spend.

Ensuring that staff are not edging towards corrupt behaviour in their choice of events and gifts was always going to tricky, given the freedom they had before: the Bribery Act is the first legal restriction specifically addressing corporate hospitality. But the report reveals that 60% of managers do not even know what the official company line is on entertaining, let alone the small print of the Act itself. That’s a lot of managers whose lack of knowledge could land their firm in hot water.

There is always an adjustment period for compliance teams to fret about when new legislation works its way onto the statute book. The trouble with this Act is that it creates a lot of corporate anxiety, but is not specific enough for firms to act decisively. Whether or not bosses will sipping mojitos or swimming with sharks will be decided case by case.

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