ARTICLE
10 February 2012

Corporate Manslaughter – What’s New?

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Clyde & Co

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Clyde & Co is a leading, sector-focused global law firm with 415 partners, 2200 legal professionals and 3800 staff in over 50 offices and associated offices on six continents. The firm specialises in the sectors that move, build and power our connected world and the insurance that underpins it, namely: transport, infrastructure, energy, trade & commodities and insurance. With a strong focus on developed and emerging markets, the firm is one of the fastest growing law firms in the world with ambitious plans for further growth.
Anyone who is a leader within an organisation, or has an interest in health and safety, will be following closely the trial due to take place in June involving Lion Steel Equipment Limited (charged with corporate manslaughter) and its three directors (charged individually with gross negligence manslaughter and health and safety failings).
United Kingdom Corporate/Commercial Law

Introduction

Anyone who is a leader within an organisation, or has an interest in health and safety, will be following closely the trial due to take place in June involving Lion Steel Equipment Limited (charged with corporate manslaughter) and its three directors (charged individually with gross negligence manslaughter and health and safety failings).

This is only the second prosecution for corporate manslaughter since the inception of the new offence in April 2008. It is worth noting that both cases have also involved directors being prosecuted in their individual capacity.

This article aims to review the impact of any investigation on businesses, give an update regarding recent developments, and look at what a business should have in place if the worst happens.

What are the ramifications of a fatality for a business and its employees?

The consequences of a fatality involving an organisation are wide-ranging and can impact significantly on both its business and its employees in a number of ways:

  • The Police and Health and Safety Executive (HSE) will attend site and remain there for some time whilst they carry out their investigations and seek to understand how a business operates and whether any failings have contributed to the death. In our experience, investigations often take a couple of years to conclude
  • Witness statements will be taken from employees.
  • Company documents may be seized, and equipment retained for testing
  • Individuals suspected of committing either gross negligence manslaughter or a breach of health and safety duties face the prospect of being arrested, having their fingerprints/photographs/DNA taken at the Police Station, and possibly charged and prosecuted in the criminal courts. If convicted, gross negligence manslaughter carries a maximum sentence of life imprisonment and health and safety offences attract up to two years custody. This may be thought unlikely to happen, but in numerous corporate manslaughter investigations the Police/HSE have been keen to interview directors and senior managers under caution as suspects to obtain evidence against the company of senior management failings as well as against the directors/senior managers for the individual offence of gross negligence manslaughter and any health and safety offences
  • Representatives of the organisation may be invited to an interview under caution. Any subsequent prosecution will also be in the criminal courts, where, if convicted, the company could face a potentially crippling fine
  • If that were not bad enough, there is also the associated prejudicial PR which, in its own right, might cause the business irretrievable damage

So what are the Police/HSE looking to establish?

When investigating corporate manslaughter, the Police/ HSE will be looking to establish that the deceased's death was caused by the way a business organises or manages its activities, and these failings represented a gross breach of a duty of care owed to that individual. A substantial element of the breach must relate to senior management involvement with the activities under investigation.

As well as looking at corporate manslaughter, the investigating authorities will also explore whether the company has breached any health and safety duties as well as whether any offences have been committed by individuals.

A new level of fines for corporations?

The first corporate manslaughter prosecution involved Cotswold Geotechnical, which was convicted on 17 February 2011 and was fined £385,000 after being found guilty following the death of Alexander Wright, a geologist who was working for the company, when a trench collapsed on him on 5 September 2008.

This prosecution involved a small company and did not tell much about how the new offence will be interpreted by the courts. However, the fine of £385,000 is significant. This is a sum which the court thought was sufficient to mark the gravity of the offence. Whilst the fine represented approximately 110% of the company's annual turnover, the court specifically recognised that it was a "consequence of the serious breach" that the level of fine ran the risk of putting the company into liquidation and that this was "unavoidable".

A fine of 100% or more of turnover for a larger organisation would easily equate to an amount well in excess of the Sentencing Guidelines Council's £500,000 starting point.

As well as the company being prosecuted for corporate manslaughter, its sole director, Peter Eaton, was charged with gross negligence manslaughter in addition to health and safety breaches. The prosecution against Mr Eaton was later dropped but only because he was terminally ill and not well enough to stand trial.

Lion Steel – what next?

This matter involves the death of Steven Berry, an employee of the company, who fell through a plastic roof panel at one of Lion Steel's industrial sites.

It remains to be seen whether the prosecution of Lion Steel (which is not a large company) will provide any further guidance on the interpretation of what is the most serious offence that a company can commit.

Whilst the chances of a medium sized or larger company being prosecuted for corporate manslaughter currently remain slight because of the "senior management" test, the prospect of its being the subject of a lengthy investigation for corporate manslaughter with a subsequent prosecution of the company and its directors/managers for health and safety breaches is very high.

Conclusion

With such serious consequences, it is essential that organisations are ready and prepared to deal with possible investigation in the event of a fatality or serious incident.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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