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September 3, 2008

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Equity fines mooted as fairer penalty for safety breaches

A Scottish MP is proposing a bill to allow fines for death or injury at work in Scotland to be paid via the issue of new shares, rather than based on companies’ ability to pay.

The so-called ‘equity fines’ would ensure that shareholders and bosses are held to account for serious health and safety breaches, rather than employees and members of the public. They were first suggested following the ICL/Stockline disaster, in which nine workers died in 2004.

Scottish Nationalist MP Bill Wilson’s proposal would give courts the power to scrutinise company finances, and would force publicly-quoted companies into issuing and then selling new shares, the proceeds of which would then be paid to the courts. The idea would ensure that companies are not crippled by large fines and, consequently, forced to make workers redundant.

Dr Wilson said he hoped the system could eventually be extended to public bodies and private companies. He said: “Such a system could greatly improve corporate criminal accountability. It imposes fines upon the value of the firm, rather than on its running costs.”

Kathy Jenkins, secretary of independent body the Scottish Hazards Campaign, welcomed the proposals as a “first step”. She said: “We have consistently argued for a wider range of penalties for companies that break health and safety law. We are pleased that the issue of equity fines has been raised and we hope it will lead to a wider debate on penalties that should be available to judges.

She added: “It is too easy for straight fines to be passed on either to the workforce, which has already suffered, or to consumers and members of the public. It appears that equity fines would place the burden on those that benefit from the company.

“When people are killed or injured at work the level of fines very often feels like an insult to the families, or people who have been injured. We feel that equity fines would be one step in redressing that, by recognising the seriousness of what has happened.”

Research published in March this year by the Centre for Corporate Accountability found that the majority of large companies convicted of health and safety offences involving a death of a worker or member of the public are fined at a level less than 0.14 per cent of their turnover, and less than 1.4 per cent of their gross profits.

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