Corporate Liability

A company is a separate legal person, so it can be fined, sued and sanctioned. Systems differ on how to attach a person’s act to the company. Vicarious liability makes an employer liable for staff acts done in the course of their work, mainly for civil wrongs. The identification doctrine treats the acts and intent of senior people who are the company’s directing mind as the company’s own. In the United States, a company can be criminally liable for acts of employees within the scope of their jobs. Failure to prevent offences, as in the UK for bribery, makes a company liable unless it had adequate procedures. Other systems look at corporate culture or systems failures. Penalties include fines, confiscation, debarment, licence loss and monitorship, and individuals can be pursued as well. The test a country uses decides whether a company can defend itself by pointing to its compliance programme.

A sales agent paid by a construction company bribes an official to win a contract. Senior managers did not know. In a jurisdiction with a failure-to-prevent offence, the company is still prosecuted, and its defence rests on showing adequate procedures: risk assessment, agent due diligence, training and monitoring. In a jurisdiction using the identification doctrine, prosecutors would need to show a senior manager’s involvement.