（c） Agency relationship in the case

　　Any agency relationship involves two parties：a principal and an agent. The agent is accountable to the principal. The relationship arises from the separation of management and ownership in public companies （and in other situations in society）.

　　In the case scenario，the principal is the Shalala Pension Fund. Its purpose is to manage a fund of many different shares and investments with the explicit aim of maximising the fund’s value for the benefit of its members’ pension values. Accordingly，it is unable and unwilling to take part in directly controlling the organisation itself and indeed， this would be outside the area of expertise of the fund’s management. Shalala therefore entrusts the agents - the directors of Global-bank - with the task of acting in its interests and it holds the directors （agents） to account for their performance.

　　The agent in the scenario is Mrs Keefer and the board of Global-bank. As CEO，Mrs Keefer is entrusted with running the company and ensuring strategies and controls are in place to achieve the objectives set by the principal. She is therefore，accountable to the principal for all of her actions and she has an unambiguous fiduciary duty to act in the sole interests of the principal. Because the principal （in this case the Shalala Pension Fund） invests for maximum capital growth，this should be Mrs Keefer’s primary concern. Anything that means that capital growth is less than it otherwise might be is a failure of her agency responsibility （such as failing to enforce internal controls resulting in Mr Mineta’s aberrant behaviour）.

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