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Media Releases
2005

18 November
2005

Corporate killing: the expert group reports

Corporate killing offence
As expected the group proposes a new statutory offence of corporate killing. This will apply to companies/organisations guilty of recklessness which leads to death and will apply, so far as possible, to all Crown bodies. It differs from the offence proposed for England and Wales, in part because of the existing differences between the crime of manslaughter in England and Wales and the crime of culpable homicide in Scotland, but also because the expert group has some criticisms of the English proposals. In particular they consider that the English proposals may still require identification of a company's 'controlling mind' - the problem at the heart of all common law prosecutions against large organisations - and, by concentrating on the failures of "senior managers" the English proposals may have the effect of encouraging companies to transfer certain management decisions to a lower level in their corporate structures. For these reasons the proposed Scottish offence has a different content from the offence in the draft bill for England and Wales.

In addition, the group goes further than the draft bill and makes several proposals - albeit on a majority basis - recommending the introduction of individual offences.

Individual offences
The draft bill for England and Wales proposes a corporate offence, carrying an unlimited fine as the maximum penalty. In contrast, a majority of the expert group in Scotland recommends introducing, in addition to the new corporate killing offence, two individual offences.

The first offence will apply in circumstances where individuals are directly responsible for death. The second is directed at senior managers and directors whose acts/omissions directly contribute to a death; this 'secondary' offence would only apply where there has been a successful prosecution against the company/organisation for the new statutory corporate killing offence.

Opposition to individual offences
The report makes it clear that there was opposition to the introduction of the individual offences from both the business representatives on the expert group and from the HSE representative.

The business community is concerned that a more stringent regime in Scotland could inhibit new investment in Scotland, and inhibit individuals from taking up senior management posts. The position taken by HSE was that, in reality, most failings leading to death are "organisational, not individual and therefore there is a danger that an individual offence could lead to scapegoating of individuals within organisations". The rest of the membership of the expert group did not share these significant reservations. It is noticeable that they are not directly responded to. The report notes simply that the majority view of the group is that individual offences would "encourage directors and managers to take health and safety more seriously and therefore promote good management". With respect to the majority, that does not address the issues raised either by business or HSE, which will undoubtedly give rise to significant comment and debate.

Penalties
In line with the majority proposal that individual offences should be enacted, custodial sentences are recommended in appropriate cases. In addition, a range of innovative corporate penalties is discussed (cash fines are the only option proposed for England and Wales). These include

  • Equity fines - where a company is required to issue new shares, possibly to a share compensation fund with the value of shares equaling the cash fine. These are seen as more punitive than cash fines as they water down a company's value.
  • Corporate probation - where the court orders action in relation to organisational matters connected with the offence. This could include implementing a compliance programme enforced by a court appointed expert.
  • Community service orders - where a corporate offender is required to undertake a project that benefits the community.

Next steps?
At present, the Executive has confirmed that it will consider in detail the legal and practical issues surrounding the recommendations before indicating how it proposes to take matters forward.

We expect that a consultation process will be announced at some point in the future. A new corporate homicide law will have significant consequences both for business and organisations operating in the public sector. Given the complexities of the law in this area, we would welcome an opportunity to work with clients to ensure that any proposals the Executive makes following this report are examined rigorously and reflect the views and concerns of both the private and public sector. Please contact Natasha Durkin if you would like to be kept updated on developments.


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