Corporate hospitality is likely to come under increased scrutiny in the event that new anti-bribery legislation is enacted in Bermuda. Sedgwick Chudleigh’s Chen Foley and Alex Potts explain the background and take a closer look at what we might expect.On Marsh 14, Governor George Fergusson announced that the United Kingdom is expected to extend the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions to Bermuda.Forty countries are parties to the OECD Convention, including the USA and the UK, and they have all passed laws making foreign bribery a crime.By 2012, 300 companies and individuals internationally had been sanctioned under criminal proceedings for foreign bribery: 66 individuals had been sentenced to prison; and one company had been fined in excess of $1.5 billion.As soon as the OECD Convention has been extended by the UK to apply to Bermuda, Bermuda’s Parliament will be required to pass new Bermuda legislation that brings local anti-bribery laws into line with the Convention by prohibiting the bribery of foreign public officials.The UK Parliament has already introduced legislation of this sort in the United Kingdom, although the UK’s Bribery Act 2010 goes much further than the minimum requirements of the OECD Convention.The equivalent US legislation is the Foreign Corrupt Practices Act of 1977, although there are important differences between the UK and US approach to ‘facilitation payments’, such as payments required for the processing of a visa, the issuing of a permit, police protection, or some other routine governmental service.Facilitation payments are illegal in the UK, but permissible in certain narrow circumstances in the USA.So what can be expected in Bermuda?All parties to the OECD Convention are required to implement measures to eliminate global corruption, and Bermuda is expected to play its part in this respect.The aim of the Convention is to criminalise the conduct of those who offer to pay bribes, known as “active bribery”, as opposed to the act of taking them.This is designed to cut off the supply-side of global corruption, in circumstances where, historically, many governments had treated foreign bribe payments as legitimate business expenses.It is now universally recognised, however, that foreign bribery distorts competition, undermines good governance, and hurts the most vulnerable.This doesn’t mean, of course, that it is not already an offence for public officials in Bermuda to accept bribes, or to engage in corrupt practices.Such conduct is already outlawed under the Criminal Code Act 1907.Implementation of the Convention should provide, however, a significant opportunity to modernise Bermuda law relating to bribery and corruption offences generally, and the sentences that such offences should attract.The most important legislative changes are likely to be those that focus on the corrupt activities of private sector individuals and businesses operating in or from Bermuda.As the UK experience has shown, the various new offences created by the Bribery Act 2010 have resulted in considerable uncertainty and business risk for individuals and businesses involved in international trade, who might not ordinarily consider themselves to be engaged in any form of deliberate corrupt activity.One area of uncertainty relates to corporate hospitality and corporate entertainment, and all businesses connected to the UK have had to revise and monitor their policies in this respect.This is an uncertain area, since there can be a fine line between legitimate forms of business development activity on the one hand, and bribery and corruption on the other.Although corporate hospitality is an accepted business practice across the globe, it may amount to criminal activity if it is intended to induce another person to act otherwise than in good faith and impartially, and in accordance with his obligations if he holds an office or position of trust.Guidance in this area has been published by the UK’s Ministry of Justice to clarify the types of promotional activities that might be considered unlawful.The guidance seeks to make clear that the Bribery Act 2010 is not intended to prohibit reasonable and proportionate hospitality and promotional expenditure for the purposes of improving the image of a commercial organisation, presenting its products and services, and establishing cordial relations.If Bermuda introduces guidance notes similar to those that are now in place in the UK, then inviting clients, or prospective clients, to a hospitality tent at the Cup Match or Rugby Classics in an effort to build good relations, or to enhance an understanding of your field of expertise, should still remain permissible.But where there is an appearance that those efforts are intended to influence business activity improperly, there could be difficulties.Expenditures that are outside the norm in a given industry or sector, or which are disproportionate or unreasonable, will also raise a suspicion and give rise to adverse inferences.Although Bermuda legislation implementing the OECD Convention is not yet in force, local and international businesses based in Bermuda should still be reviewing their policies on corporate hospitality, entertainment, and the prevention of corruption to ensure that they are in line with good practice.Since the UK’s Bribery Act 2010 and the USA’s Foreign Corrupt Practices Act already have significant extraterritorial scope, any individuals or businesses with a significant UK or US connection should already be alert to the risks in this area.Chen Foley is an Associate at Sedgwick Chudleigh. He advises on commercial disputes, with an emphasis on the insurance industry and international business.Alex Potts is Special Counsel at Sedgwick Chudleigh. He has a wide-ranging commercial litigation and arbitration practice, focusing on banking, financial services, insurance, trusts, and international business.