Supplementary Memorandum by the Centre
for Corporate Accountability (HSE 20 (a))
1. IMPOSITION
OF SAFETY
DUTIES UPON
COMPANY DIRECTORS
At present safety duties are placed upon "employers"
(and, "manufacturers" etc) which are in almost all cases
"companies". Company directors as individuals have no
legal safety duties.
In March 1996, Michael Meacher MP, as Shadow
Environment Minister told Parliament, that: "I emphasise
the responsibility for health and safety must be vested at the
highest level of each organisation . . . . Companies should appoint
an individual at board level with overall responsibility for health
and safety."
Explicit financial duties are already placed
upon directors which can result in seven years' imprisonment if
breached. Imposition of duties would both assist prevention of
death and injury as well as increase the accountability of directors,
in the event of death and injury.
2. CONFLICTS
OF INTEREST
The failure to distinguish between HSE inspectors
who carry out preventative inspections from those that carry out
death/injury investigations can result in inspectors having a
conflict of interest. Inspectors, who have failed to properly
enforce the law, may, if an injury or death subsequently takes
place may be less willing to prosecute the company.
3. USE OF
THE WORD
"ACCIDENT"
Our submission does not contain the word "accident",
since we believe that the use of this term immediately implies
that the injury/death is not the result of corporate criminal
conduct. Although some injuries may well be the result of what
is commonly understood as an "accident", a significant
minority (if not majority) are the result of serious crimes. Until
they are investigated, it is impossible to know the cause.
We believe that the use of the word sends the
wrong messages to the public, companies and to inspectors themselves.
It is a misleading and confusing term.
We would like to make the point that the HSE
should refrain from using this word, and should use neutral terms
like "incident", "major injury", or "deaths"
etc. It should say for example, "We investigate X per cent
major injuries" rather than "X per cent of major accidents".
The word "accident" has already found
its way into legislation, particularly the Reporting of Injuries
Deaths and Dangerous Occurences Regulations—and so inevitably
the word cannot be removed from all official discussions. However,
it is possible for the HSE to ensure that none of its press releases,
official documents, and other public announcements use the word.
4. "NAME
AND SHAME"
The Environment Agency has instituted a "name
and shame" policy, with a league table of those companies
who have suffered the highest fines.
The HSE have decided not to go down this path.
The HSE argues that the Environment Agency's criteria—the
highest fines and the biggest polluters—were "unsophisticated".
Although we agree that "fines" are a very imprecise
indicator, it is possible to come up with other criteria.
Channel Four broadcast a Dispatches, documentary,
"Bosses in the Dock" on 6 May this year which analysed
all the convictions over the last 12 years. They then produced
a league table setting out the most convicted companies in Britian
over that period. We do not see why the HSE can not do this, perhaps
considering the number of convictions over a period of the previous
five years.
Looking at the number of criminal convictions
is an "objective"criterion—that does not have
the same problem as "fines"—since larger companies
will usually receive larger fines. A criminal offence is a criminal
offence—determined by the courts. Companies cannot justify
multiple offences simply because they employ more people, or are
larger than other companies. In fact, large companies have greater
levels of resources to ensure that they comply with the law.
Such a policy would chime in with the Home Office's
concern about "repeat offenders". Another league table
could consider the number of enforcement notices imposed on companies
by the HSE over a five year period.
In our opinion, a "name and shame"
policy could assist in deterring companies from committing criminal
offences. Companies would not want to be part of a league table
of corporate criminals.
5. ALTERNATIVE
PUNISHMENTS FOR
COMPANIES
In our initial submission, we did not discuss
issues relating to "sentencing". We would like to make
the following points:
— The law does not allow company managers
or directors convicted of health and safety offences to be imprisoned
(except for four very technical offences). The absence of this
power contrasts with environmental law that does allow for imprisonment.
This should change.
— Companies are not subject to fines
that are proportionate to a convicted company's turnover or pre-tax
profits. The recent case of R v Howe (which provides sentencing
guidelines to courts), does not require companies to provide financial
information to the magistrate or judge. Companies are only obliged
to give financial information when it is arguing that it is not
able to pay a particular level of fine.
Evidence collected by the West Midlands Health
and Safety Advice Centre indicate that fines have no correlation
with the company's profits. It obtained information on the annual
profits of 65 of the 260 companies sentenced in the region between
1987 and 1993. The five companies with average profits of between
£1-£10,000 received an average fine of £750 per
offence which amounted to 16 per cent of their profits. The biggest
category of companies with profits of between £100,000-£150,000
received fines of £1,290 per offence—0.5 per cent of
their profits. Whilst at the other extreme, the five companies
with profits of over £10 million received average fines of
£1,185, equivalent to 0.002 per cent of their profits.
There needs to be a proper system—established
by statute—which will allow courts to fine companies proportionate
to their turnover or pre-tax profits. For example, each category
of offences could have a specific percentage attached to it depending
upon its seriousness. This percentage could then be multiplied
by the annual profits of the convicted company. This would provide
a "base fine". A judge or magistrate could then use
his or her discretion, on the basis of laid down criteria, to
either raise or lower the level of fine.
— Courts should have the power to impose
"equity fines" on Public Limited Companies. In such
a case, a court orders a company to issue a particular number
of shares, worth a particular price, and place it into a fund.
This would be a very effective way of fining PLCs: in particular
it would ensure that shareholders "suffer"—since
the price of every individual share would decrease—as a
result of criminal conduct on the part of the company.
— Courts should have the power to impose
a sentence of "corporate probation" and "corporate
community service". Under corporate probation—available
to US courts—a company is required to undertake changes
to this company to make it safe—changes that can be more
far reaching than can be required by an HSE prohibition or improvement
notice.
We would like to make the point that no government
committee—though the Sentencing Advisory Panel is now looking
at environmental offences—has ever considered alternative
forms of corporate sentencing.
October 1999
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