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Showing posts from tagged with: Benjamin Maltby

Commission or kickback?

Article by Chris Clifford

01.01.17

Benjamin Maltby

Benjamin Maltby looks at what might constitute a bribe, no matter where the businesses and individuals are operating

There have been many attempts to define what a superyacht is. Some say 24 metres load line length, as this is when the Large Yacht Code kicks-in, while others claim it begins at 30 metres length overall. For me, however, a superyacht is any yacht requiring permanent, full time crew. Why? Because this is the threshold at which owners become employers and begin delegating spending decisions.

The market for high-value yachting goods and services is evolving and competitive. Rewarding those who help bring in business is a common occurrence – but I would urge caution. Commissions… little “thank yous”… there’s a fine line between a perfectly legal transaction and a serious criminal offence. And there can be a false assumption that setting out an understanding in a formal agreement will somehow make an arrangement legal.

The giving or receiving of bribes are criminal offences where such actions fall foul of anti-corruption laws such as the United Kingdom’s Bribery Act 2010. Focussing on that piece of legislation, with very few superyachts based in the UK, why should this concern Mediterranean or Caribbean-based captains or managers? The answer is that, in order for a crime to have been committed, all that is needed is a ‘close connection’ with the UK. This includes being ordinarily resident in the UK, holding a UK passport or having control over a company incorporated or carrying on business from the UK. This applies to a significant proportion of our industry.

The three key offences are bribing, accepting a bribe, and failing to prevent bribery (though different, and more stringent, rules apply to dealing with foreign public officials). In the private sector, bribing occurs by offering, giving, or promising to give, a financial or other advantage to someone else in exchange for them improperly performing a function or activity. Broadly, such performance will have been improper when any expectation of good faith or impartiality has been breached. Owners, of course, are obliged to place a great deal of good faith and trust in managers, captains and crewmembers.

Hospitality can also constitute bribery if it is disproportionately generous. In a luxury industry, crewmembers may seek to mimic the lifestyles of their wealthy employers and not think twice about receiving hospitality which, seen from afar, may be considered to be excessive.

It is imperative for companies incorporated in, or carrying on any business from, the UK to have in place ‘adequate procedures’ to help deflect liability should anyone acting on their behalf (even if only a contractor) bribes a third party. A good example of this might be a payment to secure a prime berth to coincide with a popular shoreside event. Indeed, the growing international anti-corruption momentum means that even those not directly affected by the UK’s laws need to maintain international anti-corruption standards.

In addition to facing prosecution under the Act, owners can also sue employees or managers for any loss and, while a criminal conviction is not necessary for a civil action, it would probably be undeniable proof of civil liability.

It is vital for everyone in our industry in whom trust is placed to think carefully before accepting any kind of commission. Companies in particular should take advice with a reputable firm to ensure that their anti-corruption policies are fit for purpose and up-to-date.

Benjamin Maltby is a lawyer with Keystone Law. The views expressed are the author’s own and do not represent those of Keystone Law. This article does not provide or replace legal advice.

For more details visit www.keystonelaw.co.uk/lawyers/benjamin-maltby