What does commercial bribery have to do with the hospitality industry? A bribe is a payment you make to influence behavior. Generally, commercial bribery is a secret payment made to influence how someone does business. However, the exact conduct that constitutes commercial bribery is defined by state law, which can vary widely.

How does that apply to the meetings industry? Here's an example: An association hires a planner to act as its agent to book a meeting. A hotel then agrees to pay the planner a commission for booking the association's business at the hotel. If the association isn't told about that payment, it may be commercial bribery, and both the planner and the hotel could be There are lots of variables. Which state's law will apply to determine whether a violation occurred? It will probably be the state in which the contract is to be performed, most often where the hotel is located. And if the planner is an "agent," who is the principal - the association or the members of the association? That will determine to whom that payment will have to be disclosed to avoid liability. Whose responsibility is it to disclose the There can be further complications: If the violation involves interstate commerce or the U.S. mail, it could be a violation of federal law in addition to state law. But it's only bribery if the payment is not disclosed! There's no need to worry about state or federal laws if the payment is not secret.

Why is disclosure suddenly becoming so important? It really isn't. These laws aren't new. Major hotel chains contacted for this article agreed that they have had policies requiring disclosure of payments for many years. Unfortunately, they also admitted that it was very difficult to enforce such policies at the individual property level.

During the late '80s and early '90s when the economy was weak and convention business was hard to get - individuals in the hotel business were more likely to "forget" their company's disclosure policy if it was necessary to book business. Tax law changes then made it necessary for hotels to be money making entities, even in a tight economy. placing even more pressure on sales and management staffs to perform and thus more incentive to "look the other way" if it meant landing business.

In the past several years, the meetings industry has become more and more sophisticated. Handshake deals have been replaced by formal written contracts. More and more groups use third-party providers of one type or another to handle portions of their events. One representative has disclosed that his chain paid out more than $19 million in payments to third-party companies last year.

The hospitality industry is under great scrutiny because of its success and because of the recent high-profile transactions that have consolidated the number of suppliers. The more money that is being paid out and the fewer the players in the business, the more likely it is that individuals or government agencies will investigate convention business practices. Thus, hoteliers have woken up to the fact that the disclosure policies that had been too often ignored or forgotten needed to be followed to avoid exposure to liability.

Disclosure is not the end of the world. The Martians didn't really attack during "War of the Worlds" and disclosure is not really some secret plot to put third-party providers out of business. Once the legal and business ethics issues are analyzed, it becomes clear that disclosure is neither new, nor insidious. If all participants in the industry automatically conduct their business openly and honestly, the term 'disclosure" will no longer generate concern.

Lisa Sommer Devlin is an attorney with the Phoenix-based law firm of O'Connor, Cavanagh, Anderson, Killingsworth & Beshears.

First published in: Convene Magazine, May 1998