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Last Updated: Saturday, 23 April, 2005, 10:13 GMT 11:13 UK
A law of unintended consequences?
By Paul Wade
A partner in law firm Simpson and Marwick

Paul Wade
Paul Wade believes the Scottish Executive is right to hesitate
Those who advocate reform and strengthening of corporate killing laws - and it is hard to find anyone who does not - presumably have the objectives of reducing the incidence of fatal work-related accidents and, when they do occur, of punishing the "guilty".

The publication by the Home Office of the Corporate Manslaughter Bill for England and Wales, eight years after the original manifesto commitment, has been hailed as a milestone.

The decision by the Scottish Executive to consult with a "panel of experts" before considering equivalent Scottish legislation has been branded an unnecessary delay.

The English bill is a very watered down version of what was originally proposed.

It is aimed exclusively at "non natural" persons - virtually every form of legal person, except real people. If implemented, it will have no sanction against individuals - only the organisations for which they work.

No individual will, as a result of these proposals, be censured, fined or sent to prison.

Inward investment

The original proposal, published by the Home Office in 2000, to make directors and senior officers personally responsible and to make them liable to long terms of imprisonment if convicted has been abandoned.

In this respect there is no realistic prospect that any Scottish reform will be different - the consequences for inward investment would be too great.

What then of the proposal to make companies and other organisations responsible for corporate killing? How will such an offence reduce the incidence of fatal accidents and, when they occur, punish the guilty?

The English bill provides that the sanction for conviction is an unlimited fine.

Firms may take steps to ensure that senior managers do not face court

Companies and many organisations are already subject to the Health and Safety at Work Act 1974 and related legislation which imposes upon them vast numbers of statutory duties, breach of which is a criminal offence, whether the breach results in an accident or not. The penalty for a breach of any of these provisions is... an unlimited fine.

When passing sentence in HSE prosecutions now courts can and do take into account the consequences of the breach, especially where the consequences include a serious injury or fatality.

So, the penalties are to be the same as under existing legislation. But will the stigma associated with a conviction for corporate killing be a deterrent?

A conviction for corporate killing might count against a company engaged in a competitive tendering process.

However, the majority of work-related fatal accidents occur as a result of the activities of relatively small organisations. Many such organisations cease to trade after a serious accident.

'Shell' company

Others can and do change their corporate identity quite regularly and readily in any event for organisational or fiscal reasons.

It will not be difficult (and there is nothing in the proposals to prevent it) for a small or even medium sized company, were it faced with the possibility of a corporate killing charge, to re-organise itself so that the organisation which ultimately faces the charge is a "shell" company with no continuing connection with the business or those who were running it, with no money to pay the fine and with a changed name.

For practical purposes a conviction under the proposals contained in the English bill will be avoidable by most small or medium-sized companies.

But what of larger organisations? They will not find it so easy to change their corporate identity.

The proposals contained in the English bill do not even purport to raise standards
Paul Wade

In the case of such organisations the evidence required to be adduced by the prosecution is likely to be complex.

It is going to involve identifying "senior managers" and showing that the way they organised its activities amounted to a "gross" breach of duty.

It is almost inevitable that by the time any such case reaches the court there will have been significant changes in the senior management of the organisation and probably its ownership in terms of shareholders.

The court would then be convicting an organisation which was only in a technical sense the same organisation as committed the crime.

Surely the provisions will prevent some fatal accidents occurring by raising standards?

But in his introduction to the Corporate Manslaughter Bill, the home secretary said: "This is not about new standards.

Raise standards

"It is not my intention to propose legislation that would increase regulatory burdens, stifle entrepreneurial activity or create a risk averse culture and I am satisfied that these proposals do not."

The proposals contained in the English bill do not therefore even purport to raise standards.

The proposals will not apply to the overwhelming majority of those culpably responsible for serious accidents (individuals) and be avoidable by most of the rest (small or medium sized companies).

So much for the intended consequences, but what of the unintended consequences?

Exterior of Home Office
The Home Office first published its proposals in 2000

The organisations susceptible to such a charge - mainly big companies and public authorities - will mainly want to avoid the possibility of conviction should a tragedy occur.

The chances are they will do that, not by raising safety standards but by internal reorganisation, seeking to create paper trails effectively establishing safety responsibilities at low managerial levels to prevent any failures being attributed to "senior managers".

When a fatal accident occurs and a prosecution is considered, the prosecuting authorities will require to devote significant resources into investigating issues which go far beyond the scope of any current HSE prosecution - not just identifying the cause of the accident and the responsibility for it but investigating the internal workings of the accused organisation and attributing the occurrence of the accident to gross breach of duty by 'senior managers'.

The police, HSE and prosecution authorities do not currently have the resources to carry out such investigations without neglecting other work.

The Scottish Executive are right to hesitate before putting forward any proposals.

Law change delay 'could backfire'
23 Apr 05 |  Scotland

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