Bribery law poses hurdle to Olympics hospitality

LONDON Fri Mar 16, 2012 8:00am EDT

LONDON (Reuters) - The Olympics may be the hottest ticket in London this summer but some of the best seats remain unsold as big companies weigh the cost and the risk of breaching Britain's new bribery laws before buying premium hospitality packages.

In the past, only sponsors could wine and dine clients at the Games, but London organisers have opened up the market to allow businesses to buy packages costing up to 7,500 pounds per person for the opening ceremony on July 27.

While demand for standard tickets has far outstripped supply, an economic slowdown was always going to make these corporate deals a tough sell. The Bribery Act that took effect in July 2011 has added to the challenge.

With the Act allowing "reasonable and proportionate hospitality", the Olympics are the highest profile test of what that means in practice.

"It has, to some extent, been a thorn in our side for the last year," said Alan Gilpin, chief operating officer for Prestige Ticketing, part owned by French catering company Sodexo (EXHO.PA) and which is providing corporate hospitality.

"Everyone would liked to have sold more. Is the Bribery Act a contributory factor? Probably yes," said Gilpin, noting sales for t he 2011 rugby union World Cup in New Zealand picked up pace as the event drew near.

Prestige has an allocation of around 88,000 tickets for the Games - about 1 percent of the total - and has sold just under 70 percent of those.

Its so-called Gold package for the men's 100 metre final on Sunday August 5 costs 6,500 pounds for a top seat in the Olympic Stadium, preceded by a champagne reception and dinner in a purpose-built pavilion nearby in the Games park.

MIXING BUSINESS AND PLEASURE

Britain introduced some of the toughest anti-corruption laws in the world in response to criticism from international groups that existing laws were out of date.

Justice Secretary Kenneth Clarke said the act was not designed to ban corporate hospitality - an industry that has become an important source of revenue for sport.

"Rest assured - no one wants to stop firms getting to know their clients by taking them to events like Wimbledon or the Grand Prix," Clarke said in the foreword to guidelines to the act produced by his department last year.

Indeed, the Olympics are the ultimate chance for sports-loving business folk to mix.

Britain is tapping into this by organising a series of business summits around the Games, including one chaired by Prime Minister David Cameron on the eve of the opening ceremony.

"It is like a long summer Davos," said Tim Jones, a partner at London law firm Freshfields Bruckhaus Deringer, referring to the annual gathering of top executives in the Swiss Alps.

Jones, whose firm is the official legal services supplier for London 2012, said the introduction of the Bribery Act had focused the minds of a lot of companies.

"It has made everyone very careful and cautious. People have come to us to say can we invite guests? The answer is yes," he told Reuters.

However, Jones said companies needed to put safeguards in place to avoid being caught out. He recommended keeping a register of who was being invited and the justification, reinforced by internal company scrutiny by a senior official.

Invitations should not be made if the Games coincided with sensitive decisions on contract awards or renewal. Jones also noted the language of the act was much tougher when it came to hosting representatives of overseas governments.

"Once you get into foreign public officials then most people will apply a different set of standards and say 'We cannot invite them'," he said.

CHAMPAGNE, CANAPES AND CAUTION

The Serious Fraud Office, which has the job of enforcing the Bribery Act, has been monitoring the situation closely.

"We are obviously interested in the Olympics," spokesman Sam Jaffa said. "There is nothing wrong with building relationships. Expecting something in return is what is wrong."

Jaffa said there were grey areas in terms of what was acceptable, adding the SFO could not be totally prescriptive about where the boundaries lie.

The SFO would be looking at things like whether invitations to the Games included add-ons in the form of extended hotel stays and free travel for friends and families of guests.

Thomson Reuters (TRI.N) (TRI.TO) is allowing staff to accept Games tickets, subject to management approval and providing the person offering the tickets hosts the event. Employees are being advised to turn down free accommodation or travel unless they can get clearance from senior management.

The Olympics are bankrolled by a roster of 11 long-term international sponsors, while London has signed up more than 40 additional backers specifically for its Games.

A right to buy tickets is part of the deal, but companies appear to be playing it safe given concerns over bribery and a public backlash over how few seats were going to ordinary fans.

Telecoms company BT (BT.L), a London sponsor, said its corporate hospitality was subject to strict guidelines.

It and other major sponsors are also distributing their tickets among clients, customers and staff.

"The vast majority of the tickets we have bought are going to our retail customers through our Record Breakers promotion or our employees for reward and recognition," BT said.

"We are conducting some corporate hospitality around the Games, as you would expect. But we are not providing air transport for any guests."

The broad guidance is that the champagne can flow this summer but companies must guard against excesses that could leave them with a nasty hangover.

"Everyone should be taking advantage of this fantastic business opportunity," said Jones of Freshfields Bruckhaus Deringer. "But companies should make sure they have proper processes in place and that they stick to them."

(Reporting by Keith Weir; Editing by Chris Wickham)