The Bribery Act should help to give us a level playing field

The new laws will reduce charities' cost of doing business with, says John Hildebrand of Investec Wealth & Investment

John Hildebrand
John Hildebrand

Apart from making a sizeable number of employees at both Rupert Murdoch's News International and the Metropolitan Police a bit nervous, will the Bribery Act 2010 have an impact on the rest of us?

Given the large number of emails I have been getting from our compliance department (as a precautionary measure, I hasten to add), I think it might have quite an impact on the City of London.

In addition, previous articles in Third Sector have already shown that charities with large worldwide operations have some understandable fears about what their agents might be doing overseas.

So what impact is this going to have on the City, and how might this help or hinder charities? The Bribery Act came into force on 1 July this year. It says there are four main offences: we must not offer or make bribes or other inducements; we must not request or receive bribes; we must not bribe foreign public officials; and as a company, my employer, Investec Wealth & Investment, has to have in place a process to prevent bribes being paid.

I think I can assume that most charity fund managers will not be taking or paying bribes, but this still means that we have to be careful about giving gifts or supplying entertainment, because there are some in the City who think that entertainment helps to lubricate the system.

Under the new regime, gifts and entertainment will still be allowed, but they will have to be declared. In practice they had to be declared previously, but at our firm we now need pre-authorisation before taking any gift that is thought to be worth in excess of £50.

Although I do not expect that sporting events will now have vast rows of empty seats, it should mean that the costs of doing business actually come down slightly, which must be of benefit to our customers.

In particular, entertainment provided by unit trust managers has in the past been quite high in volume, so less money spent on entertainment could lead to lower fees.

In this regard, if a fund encourages people who might not otherwise have done to invest in it through inducements, then the fund could be fined and all the unit holders could suffer as a result.

Charities that raise money through balls and awards dinners and magazines that write about charities could suffer if these were seen to be inducements. However, the editor of Third Sector can relax: this particular form of entertainment should be regarded as reasonable, so it is unlikely to suffer.

Overall, some tightening up on bribery and entertainment is no bad thing - particularly if it leads to lower costs and investors making choices for the right reasons. Facilitation payments or claims that services are "free" are designed to attract business that might not otherwise be won and are distortions to the proper workings of a free market.

In my opinion, anything that leads to greater fairness and what people call "a level playing field" should be supported.

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