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Wednesday, 13 November, 2002, 12:09 GMT
Corporate manslaughter plan dropped
Scene of the Paddington train crash
Should companies be prosecuted for health and safety violations?
The UK Government has postponed plans to regulate companies more closely, including a clause that would have allowed them to be prosecuted for "corporate manslaughter" in cases such as the Paddington Rail Crash.

Union leaders responded furiously to the news, pointing out that the corporate manslaughter clause had been promised in Labour's 1997 Manifesto.


I am dismayed that we still have no prospect of tough legislation on corporate manslaughter

Kevin Curran, GMB
Kevin Curran, boss of the GMB union's Northern region, who is running to become its general secretary, said:

"I am dismayed that we still have no prospect of tough legislation on corporate manslaughter. Labour promised us tough action against employers who negligently kill or maim over a decade ago.

"We have had six Queen's speeches and still we do not see any prospect of this promise being fulfilled."

And the Centre for Corporate Accountability said:

"The Labour Government's commitments on criminal justice set out in the Queen's speech fail to deal with the victims of corporate crime.

"The Queen's speech also does not implement any of the promises on safety set out in its Health and Safety strategy Statement of over two years ago - to increase sentencing powers, to remove Crown Immunity, and to impose director duties."

A spokesman for the Department of Employment said that they had already made it clear earlier this year that there would be no companies legislation in the Queen's Speech, as they needed more time to consult on a range of issues.

The White Paper on modernising company law was published in July.

Company relief

Companies will be relieved by the news, however.

Patricia Hewitt
DTI's Hewitt: trying to balance business and union concerns
They are already facing some major changes as a result of the newly enacted Enterprise Bill, which only became law a few weeks ago.

They are worried that the Treasury is planning major changes to corporate taxation, which may be announced in the Pre-Budget Report in about two weeks time.

The CBI has already crossed swords with the Treasury over the level of corporate taxation, which they claim has risen by 43bn during the time Labour has been in power.

And they are concerned that the DTI might be preparing to give more rights to people in the workplace, reducing management flexibility.

Could Enron happen here?

Among the issues the DTI is still investigating is whether an Enron-type corporate scandal could happen in the UK.

Earlier in the year, it set up two investigations, looking at the role of non-executive company directors and the role of accountants as auditors.

The first inquiry - chaired by Derek Higgs - reflects concerns that non-executive directors may not be independent enough to blow the whistle on questionable boardroom decisions.

It has yet to report.

A separate government "coordinating group", chaired by DTI Minister Melanie Johnson, is looking into whether the commercial interests of supposedly independent auditors have become too closely aligned with those of their corporate clients.

That has issued a preliminary report in July, and but will not reach its final conclusions until January.

Fat cat pay

The inquiry into the role of non-executive directors - appointed to protect shareholders' interests - is expected to look at ways of distancing them from boardroom influence.

British non-executive directors tend to be selected from a limited number of leading business figures, raising fears that close professional relationships with company directors may compromise their independence.

The government has been concerned about ensuring that non-executive directors take an active role in setting executive pay, in order to counter concerns about "fat-cat" salaries.

Audit scandals

The probe into the audit profession, meanwhile, did consider forcing companies to switch to different accountancy firms at regular intervals, among other remedies, but rejected that plan.

In the case of Enron and WorldCom, weak boards proved ineffective in policing fraud and wrongdoing by management executives.

And auditors, who also provided the same companies with expensive consulting activities, were reluctant to criticise irregularities in the accounts.

The UK is backing plans for one universal worldwide accounting standard.

At the moment, accounting rules in the United States are very different from those used in the rest of the world.


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21 Jul 02 | Business
23 Jul 02 | Business
19 Jun 01 | Business
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