How does an organisation incur criminal liability for corruption?

 

In many jurisdictions, companies can be liable for criminal offences. This liability may arise in a number of ways including:

 

• Through the acts of its officers or employees.  A company may incur criminal liability through the corrupt act of an officer or employee if he/she was acting within the course of his/her employment.  Therefore, if an employee responsible for preparing work records on behalf of the company submits a false work record to another organisation in support of the company's claim for payment, then the company (as well as the employee) could be liable for fraud.  Or, if a company director decides to pay a bribe in connection with the company's business, then the company (as well as the director) could be liable for bribery.

 

• Through the acts of its agents.  A company may incur criminal liability through the corrupt act of an individual or organisation which has been appointed to act on the company's behalf, and where the corrupt act is committed in the course of that appointment.  For example, this may occur if an agent appointed by a company pays a bribe to a third party in order that the third party awards a contract to the company.

 

• Through the acts of its related companies or business partners.  A company could be liable for a corrupt act committed by a subsidiary or associated company, joint venture or consortium partner, sub-contractor or supplier, where that corrupt act could benefit the company's business.  Such liability could arise where the company authorised, approved, condoned or was wilfully blind to the corruption.  For example, this may occur if a sub-contractor appointed by a company pays a bribe to a third party in order that the third party awards a contract to the company (with the result that the sub-contractor is awarded the sub-contract).
  
  
  

Wilful blindness (or "turning a blind eye") occurs where a person in authority (such as a manager of a company) suspects that there is a risk of corruption in relation to a business transaction in which the company is involved, but deliberately avoids making inquiries and taking reasonable preventive action.  In such situations, even if the manager has not been expressly told that, for example, a business partner is paying a bribe which may benefit the company, a court may infer that the manager must have known that a bribe would probably be paid.  This inference may arise where the circumstances would be likely to put the manager on notice (for example, where an agency commission is significantly disproportionate to the legitimate scope of services which the agent is to undertake).  It is, therefore, important for managers to make proper inquiries should they suspect corruption, or the risk of corruption, in relation to the company's affairs, and to take reasonable steps to prevent or stop the corruption.  If they fail to do so, their inaction may make both them and their company liable.