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Research & Briefings
To: The ETR Select committee
From: The Centre For Corporate Accountability

Date: 27 October 1999

This is a supplementary memorandum to the evidence given by the Centre for Corporate Accountability..
  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 M.P, 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 year imprisonment if breached. Imposition of duties would both assist prevention of death and injury and as well as increase their accountability, 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% major injuries" rather than "X% 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 can not 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 twelve years. They then produced a league table setting out the most convicted companies in Britain 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 byon companies 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% of their profits. The biggest category of companies with profits of between £100-150,000 received fines of £1,290 per offence - 0.5% of their profits. Whilst at the other extreme, the five companies with profits of over £10 million received average fines of £1185, equivalent to 0.002% 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 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 of 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 that can be required by an HSE prohibition 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.
Home -> Research & Briefings -> Government and Regulatory Bodies -> The Health and Safety Executive -> 1999 Select Committee Inquiry into the Work of the Health and Safety Executive -> CCA's Evidence to the Select Committee - Supplementary Written Evidence
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