Associated persons, International - Written by on Saturday, October 9, 2010 3:07 - 0 Comments

Guilty for something done by someone else

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Whose conduct are you on the hook for?

At we’re following the question of what will constitute an “Associated Person” under the UK’s Bribery Act when it comes into force next April closely. It’s important because under the UK Bribery Act organisations will be criminally responsible for bribes by “Associated Persons”. There is a defence of Adequate Procedures but that is the subject of a separate post!

Moving back to the question of “Associated Persons” we recently attended a presentation where Roderick Macauley of the UK’s Ministry of Justice spoke.

Mr. Macauley was very keen to state that, contrary to the Domesday scenario (the school of thought that anyone can be viewed as an Associated Person), in the MoJ’s view the concept was limited.

We recently (last week) interviewed Vivian Robinson QC General Counsel of the UK’s Serious Fraud Office and we raised the same point. Mr. Robinson made the same point. The concept in his view was limited.

The Statute

It’s worth looking at the exact wording of the Statute in Section 8 (which defines the concept of Associated Person in Section 7):

(1)For the purposes of section 7, a person (“A”) is associated with C if (disregarding any bribe under consideration) A is a person who performs services for or on behalf of C. [our emphasis]

(2)The capacity in which A performs services for or on behalf of C does not matter.

(3)Accordingly A may (for example) be C’s employee, agent or subsidiary.

(4)Whether or not A is a person who performs services for or on behalf of C is to be determined by reference to all the relevant circumstances and not merely by reference to the nature of the relationship between A and C.

(5)But if A is an employee of C, it is to be presumed unless the contrary is shown that A is a person who performs services for or on behalf of C.

The key to all of this, in the wording of the statute, is that the in order to be an Associated Person the person or entity must “perform services” for the organisation.

Mr. Macauley’s view was that the payment of a bribe itself would not constitute such a “service”. Mr. Macauley said that if the “service” was the payment of a bribe on behalf of the organisation then the substantive offence (ie bribing) itself would be committed by that organisation.

What about affiliates?

On a related point Mr. Macauley was also asked about the concept of parent, sister or other affiliated companies activities outside the UK drawing an otherwise innocent UK subsidiary into the UK Bribery Act through the concept of “Associated Person”. In other words, was a sister/parent/affiliate company with no other relationship to the UK which bribed be viewed as an “Associated Person” of the UK subsidiary under the Bribery Act.

Mr. Macauley referenced issues like the principle of corporate personality and problems with piercing the corporate veil under English corporate law. The clear thrust was that in his view this would not of itself be sufficient.

Ultimately all agree that this (and many other questions which fall out of the Bribery Act) will be a question for the courts to decide and we can certainly envisage circumstances where arguments could be made to pierce the corporate veil, disregard the concept of corporate personality and drag in overseas parent companies, sister companies and affiliates. Each case will be very fact specific.


However, it is interesting to note that both the legislator and the principal enforcement agency take the view that there are limitations on the application of the “Associated Persons” principle.

In order for the courts to decide the extent of the principle they will of course need to have a prosecution where the point is to be determined.

Chicken and egg?

As case of chicken and egg then maybe.

We’ll be watching with interest.

Proceed with caution

It is clear that the UK Bribery Act will throw up this, and many other interesting, question(s) and organisations and prosecutors alike are “feeling their way” at the moment.

Mr. Robinson urges companies to be prudent and cautious in the interpretation of the new law pending guidance from the courts. We agree.

What you should do now

Companies should ensure that they are putting in place Adequate Procedures to prevent bribery to ensure that when the law enters into force in April next year they are compliant and have a defence under it if a problem is uncovered.

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