The definition of an “associated person” remains a broad one (namely, someone who “performs services” for a business), although the Guidance has provided some much-needed clarification in this respect. For example, the Guidance has confirmed that a subsidiary will not always be the “associated person” of its parent company (for example, if it merely remits dividends to its parent). The Guidance also explains that an organisation is only liable for the actions of its associated person if the bribe was intended (by such an associated person) to benefit the organisation directly. It clarifies that a bribe paid by an employee of a subsidiary is normally intended to benefit the subsidiary and not the parent company, even though the parent may benefit indirectly. Thus a parent will not always be caught by bribes paid by or on behalf of a subsidiary.
There has also been concern among commentators that every entity in a chain of sub-contractors or suppliers might be an associated person of the entity at the top of the chain. However, the Guidance explains that a contractor or a supplier will generally be deemed to perform services only for the entity with which it has a direct contractual relationship.
A further concern for many businesses has been their responsibility in the case of joint ventures. The Guidance considers two different types of joint ventures. In the case of a joint venture through ownership of a separate legal entity, the Guidance notes that an employee of the joint venture entity is likely to be performing services for that entity only and will not be associated with the participants in the joint venture. In addition, a bribe paid on behalf of the joint venture may be deemed to benefit the joint venture entity only, even though the owners may benefit from it indirectly. Thus shareholders may not be held liable for all activities of the joint venture company. The situation becomes more complicated if the employee of the joint venture entity was seconded by (and remains an employee of) one of the joint venture participants.
Where the joint venture is conducted through a contractual agreement, the Guidance states that an employee of one of the parties is likely to be associated with his direct employer only, and a bribe paid by the employee is probably paid for the benefit of that party only. The degree of control that each party has over the joint venture arrangement will be a relevant factor in this respect.
In addition, the Guidance states (and the Director of the SFO has acknowledged) that applying procedures retrospectively to existing associated persons, such as existing joint venture partners or existing contractors, might be difficult, but that it should be done over time. Accordingly, initially they will expect a higher standard of procedures in respect of new joint ventures as opposed to existing ones.
Of course, the question of who is deemed to be an associated person and whether a bribe can be said to have been paid on behalf of the commercial organisation will ultimately depend on the particular circumstances of each case.