In the 18th Century, Lord Chancellor, Edward, First Baron of Thurlow, expressed his frustration at pinning wrongdoing on slippery businesses; “Did you ever expect a corporation to have a conscience when it has no soul to be damned and no body to be kicked?” As a supposedly enlightened and media-literate people (or a bunch of folks hell-bent on putting business leaders in metaphorical stocks), we enjoy a culture of corporate governance that is shaped by ethics and systemic controls; where the corporation has a public face. The Baron’s aforementioned entity in its contemporary guise may not necessarily lose sleep about its status at St Peter’s Pearly Gates; but it will invariably try to avoid a good kicking.
The Corporate Manslaughter and Corporate Homicide Act 2007 came into effect in April 2008, ‘though companies have been open to manslaughter proceedings since 1965. The first conviction (link to http://www.expolink.co.uk/2011/03/corporate-manslaughter-act-first-conviction-arises/) in February 2011 of Cotswold Geotechnical Holdings Ltd resulted in a fine of £385,000, £115,000 under the minimum fine suggested in the 2010 guidelines, due to its precarious financial position. Cotswold Geotechnical Holdings is a relatively small company, the litmus test of the reach of the law would be when a substantial organisation with an elaborate management structure is prosecuted. For a successful conviction the following needs to be proven; that the defendant is an organisation that causes the person’s death, that the duty of care owed by the organisation was breached due to mismanagement of activities on a senior level and that the defendant must not fall within one of the exemptions to the Act (military operations, policing, emergency response, child protection work and probation to name a few).
Given that the first conviction resulted in nothing more than a fine, it would seem that holding iniquitous companies to account would be as easy as juggling salt. If a company has diffuse layers of management, assigning accountability takes you right back to grappling with the salt seller. What corporate liability benchmark should be imposed when deciding if it is the company or the individual at fault? Fundamentally, the Act needs to show that its purpose, to streamline the accountability process for corporate manslaughter cases, is workable both with cases of clear liability and for those where multiple parties or contexts are involved.
The public, while sceptical of the fluidity of legal proceedings in the UK, is generally in support of the onus of responsibility being held by business owners, and suspicious of junior employees being scapegoated to avoid penalty; of situations where corporations wriggle free after neglecting their health and safety obligations. Media proliferation and public demand for accountability in the face of disasters such as the Potters Bar train crash and the Costa Concordia have added to the carrion call for change.
In December 2005, Olivia Bazlinton and Charlotte Thompson, aged 14 and 13 respectively, were killed instantly after being hit by a train at a level crossing at Elsenham station. Network Rail pleaded guilty to two charges under The Management of Health and Safety at Work Regulations and to one charge under the Health and Safety at Work Act. A risk assessment conducted in May 2001 noted the wicket-gate pedestrian crossing was “undesirably risky”, and a report three years prior to the incident had recommended automatic locking gates at the crossing, but this had never been actioned. Despite the judge damning Network Rail with allegations of “corporate blindness” and acknowledging that the company “failed to ensure that the risks were properly assessed, controlled or managed”, no charges were made under the Corporate Manslaughter Act and the company was fined £1m within the aforementioned statutes. So, to surmise, a public crossing with considerable footfall was allowed to remain for a number of years with inadequate safety measures in place, resulting in tragedy, the company admitted fault and still charges of corporate manslaughter were deemed inappropriate! Motivation indeed for large organisations to commit to governing their health and safety with an iron fist…
In July 2008 three year old Meg Burgess was killed when a wall designed by George Collier and constructed by his company, Parcol Developments, collapsed on to a footpath in Prestatyn, north Wales. Rosemary Ainslie, lawyer for the Crown Prosecution Service (CPS), deemed that as Mr Collier represented ‘only’ half the company directors it was not in the public interest to extend the charge to Corporate Manslaughter. This strikes me as a problematic and unproductive decision, not to mention one with suspiciously avaricious undertones. The law, supposedly aimed at protecting and compensating citizens like Meg’s family, was swayed in this instance not to prosecute Parcol, who as an organisation with depleted coffers had little to offer the CPS.
David Cameron’s recent plans to privatise roads could result in increased litigation for private companies if accidents arise from poor maintenance. At present this is under the remit of the Highways Agency, Transport for London (TfL) and similar public bodies. Following the death of cyclist Deep Lee at a notoriously dangerous stretch of road in the capital, Detective Chief Inspector John Oldham, head of Scotland Yard’s Road Death Investigation Unit, said that although corporate manslaughter was one of a raft of offences that could be applied to the incident, the Act was “badly drafted” and had “loopholes everywhere.” Transport consultants had advised that the area was extremely hazardous and had failed design standards for safe cycling (it is due an upgrade in time for the Olympics). The case presents another problem with accountability. When asked about the design standards of the road, Mayor Boris Johnson stated that the structure had been implemented before the guidance was published. It is hard to see why the above cases would not be considered as valid grounds for corporate manslaughter charges and, unless I am mistaken, none qualify for exemption. The beacon of accountability is an ever-diminishing light. At time of writing, no charges have been brought in the case.
Justice is a shaky entity in systems that favour Goliaths over Davids. Decentralised safety services are problematic in delivering such justice but it cannot be that due to devolution of responsibility, accountability can be swept under the carpet by smart talking corporate lawyers. To encourage business owners to meet their health and safety and governance responsibilities robust deterrents need to be upheld and negligent companies held to task. There are, of course, arguments for culpability to lie with both the organisation and the individual. Often it is the actions of a number of responsible individuals, from policy makers to policy undertakers that cause an incident, and apportioning blame can prove contentious. If an individual is ultimately held responsible they may not have the means to effectively repair the damage done. Conversely, it is unacceptable for individuals to feel that they are not culpable for their own actions
Between 1992 to 2005 (prior to the Act) there were 34 prosecutions for work related corporate manslaughter in England and Wales but only six small organizations convicted. Clearly that system was not working. What is important now is to ensure processes of the Corporate Manslaughter and Corporate Homicide Act are tight enough to tie loopholes in the system and not allow it to become the next on the list of laws that oleaginous corporations laugh in the face of.
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).
The first ever conviction of a company for corporate manslaughter emphasises the fact that organisations should collaborate with their HR departments in their approach to accidents and health and safety at work. Company HR departments will have a critical role to play in preventing future liability. Whistleblowing claims may follow a corporate manslaughter incident if employees suspect continued malpractice. Cotswold Geotechnical Holdings is the first company to be charged with gross negligence under the Corporate Manslaughter and Corporate Homicide Act of 2007.
The company failed to adhere to stringent health and safety guidelines, which amounted to a gross breach of duty of care owed to the deceased and as a result have been fined £385,000 to be paid over the next 10 years. The accident occurred in September 2008, while geologist Alex Wright was taking soil samples from a deep, unsupported trial pit.
Since 1965 companies have been subject to manslaughter proceedings and there have been many high profile cases where corporations have been brought to trial prior to the Royal Assent of the Act. One of the most memorable was the Clapham Rail disaster that claimed the lives of 35 passengers in 1988 when three trains collided. The British Rail Board acknowledged liability for the accident which was caused due to careless work carried out by signal workers. As the board was responsible under the regulation of vicarious liability, it paid compensation extending to £1 million in some cases, but no one was prosecuted for manslaughter.
The Act came into effect in April 2008 and only applies to deaths that occurred after that date. Fatalities that happened before 6 April 2008 will continue to be covered by the previous law on corporate manslaughter. The Act specifies a new offence for convicting organisations where a gross deficiency in the way activities are organised or regulated, results in a person’s death. Before the law came into effect, employers had an opportunity to thoroughly consider how they manage risks. The offence is not part of health and safety law and does not require organisations to comply with the new regulatory standards. However they must ensure they are taking the appropriate action to meet current legal duties.
Health and safety legislation under the Act includes workplace safety as invoked by local authorities and the Health and Safety Executive (HSE). Corporate manslaughter cases are prosecuted by the HSE, and in court jury panels are required to consider violations of health and safety legislation in ascertaining liability of companies for corporate manslaughter. Company health and safety practices, systems and policies will be closely scrutinised to determine how serious breaches in conduct have been. In the case of Cotswold Geotechnical Holdings its conduct fell well below what was expected and it was found guilty.
Employers have a responsibility for the health and safety of their employees. If after an employee has approached their direct/line manager, safety or trade union representative about a risk to their health or the health of others and are not satisfied that it has been adequately dealt with, the Public Interest Disclosure Act 1998 is there to specifically protect them if they decide to blow the whistle about wrongdoing. The Act applies where an employee has justifiable knowledge that their disclosure demonstrates one or more of the following breaches:
Most corrupt, illegal and immoral practices go undetected within an organisation, because employees, aware these things are going on, fear the consequences of reporting them through existing internal channels. International outsourced whistleblowing hotlines are one of the most successful tools for encouraging employees to report fraud, theft, compliance and ethical issues and other misconduct; helping businesses meet their corporate governance responsibilities. Addressing such issues before they impact the reputation and operations of your business is paramount in the overall success of your organisation.
During 2010, Expolink compiled its own statistics on incidents regarding organisational process problems, duty of care and health and safety issues. These reported incidents amounted to 24% of all calls the hotline received during a one year period. While a whistleblowing hotline encourages employees to report such occurrences, companies and employers need to put preventative measures in place and address issues to decrease these statistics.
Contact us to find you more about how Expolink can help give employees the peace of mind they need to speak out about malpractice in the workplace.
View our update on the Corporate Manslaughter Act (March 2012).
