Corporate liability: beware of rogues and ostriches.

• Jurisdiction: United States
• Date: 01 March 2006
• Author: Miller, Thomas O.
• Published date: 01 March 2006
• Author: Miller, Thomas O.

A corporation can be liable for a criminal or Civil False Claims Act violation stemming from the conduct of "rogue employees," who are politely known as "adverse agents," and employees who are willfully blind or deliberately ignorant of ethical, legal and contractual requirements.

More exposure exists in high-risk foreign locations--especially if employees hide their heads in the sand.

Ethics and compliance standards can detect and prevent acts or omissions of corporate employees, agents, subcontractors and affiliates. Documenting use of these standards is invaluable during any enforcement investigation.

Special measures should govern employees--and responsible supervisors--who work in high-risk foreign locations, under accelerated U.S. contract performance requirements. In unfamiliar, remote environments, employees become increasingly autonomous, particularly if data and communications are exchanged without connection to a central data system.

Opportunities to bypass or ignore standards abound, and employees are vulnerable to pressures to deliver at any cost. In such circumstances, wisdom suggests heightened proactive measures to detect and prevent violations of law, standards and contractual requirements.

The legal doctrines of "respondeat superior" and "corporate collective...