Long arm jurisdiction - are you subject to the law?, Your Questions: Answered - Written by Barry & Richard on Friday, March 4, 2011 4:52 - 0 Comments
Ask Barry & Richard: Questions about Director & Officer liability
Can an individual and his corporate employer be separately liable under ss1 [Bribing] or 6 [Bribing a public official] by virtue of the same set of actions at the same time? In other words where the individual gives the bribe using his corporate employers money and for the intended benefit of his corporate employer and he has the required state of mind, – and if required it has been consented to and connived at by the senior officers of the employer, do you think both could be prosecuted at the same time for the identical facts and circumstances?
If all the relevant acts take place outside the UK but the employee is employed in, and closely connected with, the UK, but the corporate employer (although present in the UK) is not closely connected with the UK, do you think the employer could be made vicariously liable for the employee – thus finding the employer effectively resposnsible for the offence even though it could not be prosecuted directly? (I appreciate that the employer might have a s7 liability.)
Charles Walford, partner Watson Farley Williams
[we would normally not give the name of the person posing the question but in this instance Charles left a public question in the comments on one of our previous posts]
Thank you for these very detailed and specific questions.
To establish guilt of the corporate the prosecution would have to establish that the directing mind of the corporate (be that a “Senior Officer” or any other person) either participated in, counselled, procured or encouraged (be it by consent or connivance) the act of the employee.
Save in the case of a prosecution under section 7, the Bribery Act has not removed the old requirement of establishing that the “Senior Officer” or for that matter any officer, was a directing mind of the company.
If that is not established then notwithstanding the fact that the employee used corporate funds on behalf of the corporate to secure a benefit to the corporate whilst in its employment, the corporate would not be guilty of an any offence under sections 1, 2 or 6. This is important as it is a pre-requisite for the conviction of a “Senior Officer” under Section 14 of the Bribery Act that an offence under Sections 1, 2 and/or 6 is committed by the corporate.
If the officer did not fall within the 14(4)(a) definition (“Senior Officer”), or for example if he was not on the Board but, say, had a beneficial interest in the corporate, then if he could be shown to be a “directing mind” of the corporate, the corporate would incur the same liability to conviction as the employee if through the action of the directing mind the company participated in, counselled, procured or encouraged (be it by consent or connivance) the act of the employee.
While it is likely to be the case that a person who meets the criminal standard of the directing mind of the corporate would also be considered under company law to be a shadow director and therefore also fall within the definition of “Senior Officer” this is not necessarily so since the tests are different.
Assuming that the corporate has committed an offence under Section 1, 2 and/or 6 if a “Senior Officer” consented or connived to or with the acts of the employee in his (the employees) commission of the offence then, due to the operation of section 14 (2)(a) and (b,) if that person fell within the definition of a “Senior Officer” he would be liable to be convicted of the same offences as the employee/the corporate. “Senior Officer” is defined in section 14 (4)(a) as “director, manager, secretary or other similar officer”.
Where a “Senior Officer” was a directing mind of the company and he consented or connived with the employees commission of the offence then both the individual employee and the company would be charged with the same offence.
They would normally be tried together.
In fact it is likely that the “Senior Officer” would join them in the same trial, once again facing the same charge as the employee and the corporate.
This is an extension of Question 1:
The answer to this question, putting aside the corporates section 7 liability is:
Schedule 2 of the Act deals with ‘Repeals and Revocations’ and repeals in full the three existing statutes dealing with Corruption. The liability for offence of bribery and corruption is therefore to be determined by reference to the Bribery Act.
The term “vicarious liability” whilst well understood may be misplaced in the assessment of liability to conviction of any person, individual or corporate under the Act.
To be convicted of an offence of Bribery or Corruption the relevant terms of the Act must be satisfied.
Turning therefore to the question.
The relevant acts take place outside of the UK and are carried out by an employee who is both “closely connected” and “employed in” the UK.
As far as the employee is concerned; if the act committed outside of the UK is one which falls within the definition of an offence pursuant to either sections 1,2 or 6 then, as the facts given in question satisfy section 12 subsections (2)- no act or omission within the UK- and 12(3)- those acts or omissions would have formed an offence if done or made within the UK- , the employee is liable to be convicted under sections 1,2 or 6 of the Act by the operation of section 12(3)(b).
The employee can be tried before a court anywhere within the UK by virtue of section 12(3)(b).
The corporate is not simply “vicariously liable” for the acts of the employee. It may only be prosecuted if it incurs criminal liability as a result of the provisions of the Act.
On the facts of the problem set the following is clear :
the employee is liable to conviction due to the operation of sections 12(2) and 12(3). However, the position of the company is different;
Section 14 (3) provides that even were one to be dealing with a much graver case involving the connivance of a senior officer with the acts of the employee in the example, the senior officer could not be convicted of the offences with which he connived in the commission of unless the senior officer also had a “close connection” with the UK. This follows from the provision of section 14(3) which removes liability of conviction where it arises only due to the operation of section 12 subsections (2) to (4), as it would here.
If the senior officer had a “close connection” with the UK then he would be liable to conviction as in that case the bar to conviction within 14(3) is lifted; but in the question set it seems that only the employee is closely connected with the UK for the purposes of the Act.
In the question set a “Senior Officer” who was a directing mind and who consented or connived to or with the commission of the offence by the employee could not be prosecuted for Bribery or Corruption on the basis that the “Senior Officer” has no close connection with the UK.
The corporate could not be prosecuted on the facts given.