I am getting very excited for the summer Olympics, which begin in a few weeks. I’m particularly looking forward to the opening ceremonies. Of course, tickets to the Olympics have historically been prestigious gifts that corporations use to entertain clients or prospects. But this is the first Olympics since the UK Bribery Act went into force (and the games are actually happening right there in the UK), which is causing leading firms to question certain corporate hospitality practices, particularly if the client in question could be construed as a government official.
So could bringing foreign officials to London and providing them with entertainment lead to potential FCPA or UK Bribery Act violations? According to a recent article in The FCPA Report by Philip Urofsky, a partner at Shearman & Sterling LLP, “The FCPA does not prohibit marketing to clients, and even lavish entertainment may qualify as legitimate marketing. The trick, of course, is to ensure that marketing intended to build connections, make potential clients feel good about you and demonstrate that your company is a good business partner, both for quality and relationship, does not cross that sometimes imperceptible line between marketing and bribery.”
And that is the heart of the issue: understanding where that “imperceptible line” is. Urofsky ended his article with some useful tips that companies should carefully consider when contemplating whether to pay for government clients to attend the Olympics, or any other sports event:
*Ensure the entertainment is commensurate with the client’s rank.
*Obtain a written legal opinion supporting the legality in the official’s country.
*Pair the entertainment with some identifiable business promotion.
*Pay the expenses directly to those providing them, or get invoices.
*Give only modest gifts that are not easily converted into cash.
The Olympics may only come around once every two years, but you should be asking yourself these same questions on a frequent basis as you consider your organization’s anti-bribery efforts, and make sure anti-bribery policies are part of your corporate lexicon. Is your company planning to entertain clients at the Olympics? What is your company’s policy on entertaining… and do you know where the “imperceptible line” is?