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October 28, 2009

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Corporate manslaughter sentencing guidelines published for consultation

Fines for organisations found guilty of the new offence of corporate manslaughter will not be linked to profit or turnover but nevertheless should “seldom” be below half a million pounds.

The long-awaited draft guidelines on sentencing for the offence were published yesterday by the Sentencing Guidelines Council (SGC), which, in addition to the financial penalty, proposes sanctions in the form of a publicity order and/or remedial order, where appropriate.

In a letter to consultees, SGC chair Lord Judge explained why the Sentencing Advisory Panel’s (SAP) original proposal for fines to be between 2.5 and 10 per cent of the offending organisation’s annual turnover was rejected: “The Council concluded that [this] approach could inadvertently risk an unfair outcome, was particularly difficult to apply to public and third-sector bodies, was likely to create a perverse incentive to adjust corporate structure to avoid the proper consequences of offending, and so did not provide the most effective way of assessing the level of fine across such a wide range of situations.”

Instead, the Council is now proposing a level below which a fine “would not normally be expected to fall” — £500,000 — adding that fines “may be measured in millions of pounds”. Courts will also be able to require the offending organisation to advertise the fact of its conviction, failure to comply with which will result in a further, unlimited fine. The content of the Publicity Order will be suggested to the court by the enforcing authority or prosecution, and its aim is to ensure that the conviction becomes known to shareholders, customers and local stakeholders.

The option to impose a Remedial Order, setting out the steps to be taken to address the failures that led to the death(s), is also available and is designed to ensure that any deficiencies in the organisation’s health and safety policies and systems are dealt with.

The guideline also covers work-related health and safety offences that result in a death, stating that fines in cases where a causative link has been established between what happened and the death that occurred “should seldom be less than £100,000 and may be measured in hundreds of thousands of pounds, or more”.

Council member and vice-president of the Court of Appeal (Criminal Division) Lord Justice Anthony Hughes said: “Fines cannot and do not attempt to value a human life — compensation will be payable separately in these cases. The fine is designed to punish, and these are serious offences, so the fines imposed should be punitive and significant to reflect that.”

Explaining the decision not to link the amount of the fine to company turnover, Lord Justice Hughes said it was “not appropriate in view of the different financial structures and circumstances of organisations within the private, public and third sectors”.

Corporate manslaughter expert and SHP legal analysis columnist Michael Appleby agreed: “The guideline is an acknowledgement that the SAP’s original proposals are unworkable. The recommendation that a fine for corporate manslaughter should normally be in the millions of pounds is hardly surprising — a few years ago, Transco was fined £15m for a single health and safety breach resulting from a fatal explosion.”

On the suggestion that fines under the HSWA 1974 in fatality cases should be in excess of £100,000, Appleby said this “merely reflects what already happens in the courts today”. What would be more helpful now, he concluded, would be for the Government to “review its decision to cap the costs of acquitted defendants, which could leave them significantly out of pocket when forced to prove their innocence.”

IOSH, which originally supported linking fines to turnover, “broadly welcomed” the guidelines, saying it viewed the main aims of sentencing as “raising health and safety standards, ensuring remedial action, and as a deterrent to show societal disapproval of serious corporate failures”.

While it did not want to comment too specifically on the guidelines — as it will be consulting members on the new proposals — the Institution did acknowledge the importance of large fines, “as they may cause probing questions to be asked by major shareholders or funding bodies, and may delay or prevent the organisation from progressing certain of its other objectives, thereby helping to reinforce the business case for health and safety”.

Responses to the consultation must be submitted by 5 January 2010. The guideline and letter to consultees are available on the SGC website along with the Sentencing Advisory Panel’s advice to the Council.


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