Q&As

If a company offers non-employees a referral fee for referring clients to the company (eg X% of margin from referred work), would these fees for referring work risk contravening the Bribery Act 2010 provisions?

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Produced in partnership with Jamas Hodivala KC of Matrix Chambers
Published on: 16 September 2021
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Unlike the Foreign and Corrupt Practices Act 1977 in the United States, the Bribery Act 2010 (BA 2010) criminalises bribes to both public officials and private individuals and makes no exception for facilitation payments. Any payments to Third parties often raise red flags to financial auditors or investigators because such payments are frequently perceived to be associated with bribery, whether directly or indirectly. If not a direct bribe, the inference is that the third party may be indirectly using a share of their promised referral fee to bribe customers to sign contracts for the benefit of their principal, for which the briber then obtains their referral fee and the customer obtains a kickback. For more information, see Practice Note: Facilitation payments under the Bribery Act 2010.

The essential considerations are:

  1. whether the payment was intended as a legitimate business expense by the company

Jamas Hodivala
Jamas Hodivala, KC

Jamas' has advised and represented a large number of corporates, based in both the UK and US, which are under investigation by the police, HMRC, Serious Fraud Office, Health & Safety Executive and the Environment Agency. He is often instructed at an early stage of an investigation to advise on the legality of investigatory powers, for example, he acted for the claimant in R (KBR, Inc.) v SFO relating to a US corporate's challenge to the extraterritoriality of a s.2 Notice issued by the SFO, R (Panesar and others) v HMRC on the jurisdiction for a prosecutor to use s.59 proceedings to apply to retain unlawfully seized material and acted for a FTSE-listed UK company to prevent a regulator's retention of LPP material taken by a whistle-blower. He is currently acting for large corporate charged with fraud post-Ivey and also acted for one of the world's main ejection seat manufacturers in HSE v Martin Baker Ltd. He has also represented individuals in bribery and corruption allegations, having acted in R v Majeed and others (Pakistan test match spot-fixing), R v Westfield (Essex cricketer spot-fixing), represented the Sun's Royal Correspondent in R v Larcombe and others, a District Reporter R v Pyatt and others, and also successfully appealed a journalist's conviction in R v France, all prosecuted in separate trials as part of Operation Elveden.

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Jurisdiction(s):
United Kingdom
Key definition:
Margin definition
What does Margin mean?

Additional percentage added to an interest rate to create the final rate.

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