The Corporate Manslaughter and Corporate Homicide Act 2007, which came into effect in April 2008, achieved its first conviction in February this year, of Cotswold Geotechnical Holdings Ltd.
The case attracted huge media attention purely as it was the first conviction under the Act. However, there may be wider ramifications for employers and it remains to be seen whether or not the Act will lead to larger companies being prosecuted. As Cotswold Geotechnical Holdings was run by a sole owner and was a small organisation, it was felt that this case did not determine the full extent of the Act, which was established to address the problems of convicting larger organisations. The real test will be when a substantial organisation with an elaborate management structure is prosecuted.
When the Act initially came into force it was implied that there would be an average of 12 cases per year. However, the Crown Prosecution Service has mentioned that they are contemplating a number of other records of evidence in relation to possible further prosecutions for the offence. Prior to the law coming into effect, it had been hard to convict bigger companies but it was possible for a corporate body to be prosecuted for a selection of criminal offences including the common law offence of gross negligence manslaughter. However for an organisation to be guilty of an offence, it was imperative for a senior member of staff, such as a managing director (known as a controlling mind) to be guilty of the offence. Where any events occurred prior to 6th April, the pre-existing law applies and the current Act only applies to deaths where the injury or behaviour leading to the death, occurs on or after 6th April.
The Act focuses on the way in which a business’ activities are maintained and co-ordinated, which is generally referred to as “management failure” and whether that caused death and was a gross breach of the relevant duty of care. In addition the way in which activities are maintained and co-ordinated by senior management needs to be a significant aspect of the breach.
Organisations need to consider the sentencing guidelines, as they do not only apply to corporate manslaughter cases but also to health and safety offences that result in a person losing their life. The director of Cotswold Geotechnical Holdings was charged with an offence under the HSAW as well as gross negligence manslaughter. It was the company itself who was the first to be charged under the 2007 Act. The Act indubitably predicts concurrent prosecutions for both breaches in health and safety as well as corporate manslaughter as both of these emerge from identical facts.
It is likely that both the Health and Safety Executive and The Crown Prosecution Service will persist in prosecuting senior officials with health and safety offences which carry serious sentence, including imprisonment. One of the main sanctions for conviction under the Act is an unrestricted fine. Sentencing guidelines published in February 2010 stated that fines should seldom be less that £500,000. Cotswold Geotechnical Holdings were fined £385,000 to be paid in equally split amounts over a period of ten years. This decision was based purely on the company’s financial situation, although it is plausible the company may go into liquidation as a result of the conviction. The presiding judge at the time said that if the company was to go out of business that would be a consequence of the appalling breach that had been committed.
Cotswold Geotechnical Holdings has applied for permission to appeal its conviction. At the time this article has been published, no other information is currently available.
View our update on the Corporate Manslaughter Act (March 2012).
As the Bribery Act gets ever closer to ratification on July 1st, companies are working hard to ensure they are compliant, and that all new procedures and processes are thoroughly communicated and adhered to throughout their organisation.
Corporate Hospitality has provoked a wealth of queries regarding compliance; just where is the line drawn between celebrating a new business partnership with an afternoon at Silverstone and this being misconstrued as bribery?
The Ministry of Justice recently published Bribery Act compliance guidelines that recommended Whistleblowing Hotlines as part of an effective corporate governence and anti-bribery strategy. Expolink will be hosting a conference in early 2012 at the Institute of Business Ethics with special guest speakers from the Ministry of Justice. This follows on from the success of the seminar Expolink held in September 2010 where guest speaker Roderick Macauley addressed the audience on the impending Bribery Act.
On July 1st the Bribery Act will come into force. As part of our commitment to assisting our valued client base and the wider community with developments in corporate governance and law, Expolink is delighted to announce that we will be hosting a conference at the Institute of Business Ethics with special guest speakers from the Ministry of Justice. This follows on from the success of the seminar Expolink held in September 2010 where guest speaker Roderick Macauley addressed the audience on the impending Bribery Act.
Roderick is a policy adviser on criminal law at the Ministry of Justice, currently managing the implementation of the Bribery Act. For the past four years he has led on the development of Government policy on the reform of the criminal law of bribery, managing both the pre-legislative scrutiny of draft legislation in 2009 and the Parliamentary passage of the Bribery Act.
Dates and attendance information will be available nearer the time. For further information please contactscott.bridgen@expolink.co.uk or call 01249 661604.
Ahead of the Retail Fraud Show on 14th April and with the recently disclosed Bribery Act guidelines, we asked Phil Willsmer, Director of Operational Risk for the Co-Op Group, for his thoughts on the effects of the Bribery Act within the retail sector, challenges for good corporate governance and what we can expect from the Retail Fraud Show on 14th April.
What effect do you anticipate the Bribery Act will have on Co-op and retail as a whole?
With regards to the Co-op Group, the implications of the Bribery Act Adequate Procedures will help to reinforce the excellent levels of corporate governance we currently have in place. A complex organisation like ours needs to have consistent messages and procedures across the differing businesses. Compliance is one of the requirements that has been embraced at the very top of our organisation. The retail sector is no different to other sectors in the UK and whilst each has its own challenges, the requirements of the Act are very generic in their wording. It astonishes me that some organisations appear to be either ignoring the Act or are in the very early stages of building a framework to be compliant to the requirements of this legislation.
Do you think the Bribery Act will have a significant impact on both SMEs and large corporates? If so, how?
There are various challenges for different sizes of business, with more emphasis being placed on large corporations to ensure they have good governance not just within their own organisation but also in their supply chain and intermediaries. This in itself presents a logistical challenge to ensure that all your third party suppliers and contractors implement similar levels of compliance to yourselves. The challenge for regulators is getting the message across effectively to SMEs and there will be a requirement for support to be provided in understanding the legislation at this level. I believe there is a role for large corporations and the regulators to play in determining a wider understanding by all SMEs.
What challenges does good corporate governance present in modern business?
Corporate governance should be embedded in any modern business as it is fundamental to the values and principles of how an organisation should operate. It also reduces the risk of financial and reputation harm to an organisation and provides assurance to the Board about the regulations that are in place. This is why governance needs to be driven from the top down and have exposure and representation through risk committees and the executives of any business.
What made you decide to implement Expolink’s whistleblowing hotline at Co-op?
We conducted a review of the existing whistleblowing requirements of the Group and identified that due to the size of the organisation and the diversity of its businesses, we needed a whistleblowing service that could effectively respond to the unique challenges presented. Expolink was selected as the clear winner on a number of set criteria and the relationship has gone from strength to strength. We also introduced a bespoke data security line service with Expolink and the fact this was implemented with minimum impact and disruption, is a reflection on the relationship that exists between our two organisations.
What aspects of the hotline have you found most beneficial?
There are two main aspects; the first being the proactive way our account is managed. An example of which is when the requirements of the Bribery Act were originally announced in the consultation paper, Expolink approached us and offered to extend the service to all our supplier base which gave us an additional level of compliance and which was tailored to suit our organisation. The second aspect is the contact and support we receive from the Expolink team, across all areas, and the ‘can do’ attitude displayed, to every challenge given to them.
Please would you tell us a bit more about what we can expect at the Retail Fraud Show on 14th April?
Sam Cowburn is the Co-Op Groups’ Bribery Compliance Manager and will reveal the journey we have been on, so far, to ensure the Group is in the best possible shape for compliance to the legislation. Whilst the publication of the adequate procedures has been put on hold by the current Government, it would be naive to take this as an indication that the legislation will not be enacted. I strongly recommend that organisations use the additional time to ensure that their policies and processes are as robust as possible for when the Act does eventually come into force.
What does ethical business practice mean to the Co-op Group?
Simply put, it is at the heart of our culture and influences everything we do as an organisation. We have built a reputation around our values and principles and this is something that we will never compromise on, regardless of the commercial pressures we are exposed to in these difficult economic times.
What are the greatest challenges ethical businesses face in modern society?
The fact that we live in a throwaway society means there is a drive for the most economical goods and produce which can lead to unethical practices in other parts of the world. I think that all large corporations are aware of the damage which these practices can have on their brand reputation if exposed to the wider public, so this acts as a social conscience which is a good thing. There are many organisations that trade responsibly and ethically and this can only be a step forward.
How does Co-op protect itself against retail fraud?
We utilise similar procedures to many other retailers that include analytical tools and measures to reduce all types of fraud, both within our retail environments and also at our corporate centres.
