Glossary term
Associated Person
Subject: Financial Crime, Bribery and Corruption
Also known as: Person performing services on behalf of the company
An associated person is anyone who provides services for an organisation or acts for it, such as an employee, agent, subsidiary or contractor, and whose bribery can make the organisation itself liable.
Explanation
The idea comes from the UK Bribery Act, where the category is defined by what the person does, not by their legal status. A company can be guilty of failing to prevent bribery if someone associated with it pays a bribe to obtain or keep business for it. Whether a person counts is decided by looking at all the facts, including the nature of the relationship, the payment arrangements and what they actually do. Employees are presumed associated. Agents, distributors, joint venture partners, consultants and sometimes suppliers can also be. Other regimes use related ideas. The US FCPA reaches payments made through third parties when the company knows of them, and French and Brazilian laws cover intermediaries as well. The practical effect is that responsibility extends beyond direct staff. Firms therefore run due diligence, write anti-bribery terms into contracts and monitor third-party payments. In many corruption cases a middleman carries the money, so liability that stopped at direct staff would leave the main route open.
Example
A software company hires a local consultant to help win a government tender. The consultant passes part of his fee to an official. The consultant is an associated person, so the company faces a charge of failing to prevent bribery. Its defence rests on showing it checked the consultant, set fees at market rates and trained him on the rules.
Not to be confused with
- Employee
- An employee is one type of associated person. The category also covers agents, subsidiaries and contractors who are not on the payroll.