The Ministry of Justice came out with its Guidance publication on the UK Bribery Act of 2010 earlier today and Tom Fox over at FCPA Compliance and Ethics Blog highlighted five key points of the statute in his posting on it. One of those bullet points notes that “a company will be vicariously liable for the acts of third parties if such illegal conduct was performed on behalf of the company.” The Blue Collar Comedy Tour’s Ron White says that if he were in charge of Homeland Security’s terror alert system there would be only these codes: (1) get a helmet, and (2) put on the damn helmet. On vicarious liability under the Bribery Act, companies will shortly be reaching for protective headgear.
Fox’s bullet summarizes Paragraph 37 of the Guidance, which states in pertinent part that:
"[a] commercial organisation is liable under section 7 if a person ‘associated’ with it bribes another person intending to obtain or retain business or a business advantage for the organisation. A person associated with a commercial organisation is defined at section 8 as a person who ‘performs services’ for or on behalf of the organisation."
* * * * *
"Section 8(4), however, makes it clear that the question as to whether a person is performing services for an organisation is to be determined by reference to all the relevant circumstances and not merely by reference to the nature of the relationship between that person and the organisation. The concept of a person who ‘performs services for or on behalf of’ the organisation is intended to give section 7 broad scope so as to embrace the whole range of persons connected to an organisation who might be capable of committing bribery on the organisation’s behalf." [Emphasis added.]
Nice definition of “services for or on behalf of the organisation” (sic). Or lack of it. This sounds strangely like the FCPA’s problematic failure to define a “foreign official”, as Mike Koehler over at FCPA Professor has been justifiably railing about for some time now.
As a result and like the FCPA flash point, what are or are not “services for or on behalf of the organization” under the Act are likely to become bones of contention. What happens if the Ministry of Justice takes the overly aggressive stance that virtually anything undertaken is done “for or on behalf of the organisation” (sic) in question? In that case, the phrase will mean whatever the Ministry says it does, and this might have extreme, if not ridiculous, possibilities.
Suppose that after a meeting, the hosting company in Singapore calls a taxi for the general manager of its joint-venture partner and tells the driver to drop him off at his hotel. On the way, the visiting GM indicates that it is early and he would like to take in some night life. If the cabbie drives him to the fishnet-stocking section of town and helps him find entertainment there, did the cabbie do it “for or on behalf of” the hosting company? Apparently he will have if the Ministry of Justice chooses to say so.
If that comes to pass, don't forget to buckle the chinstrap.
