| Could
dangerous employers care less?
The case for jailing dangerous
directors
[Hazards 90, May 2005]
If directors faced the prospect of a jail term
or even the loss of their boardroom seats for poor safety performance,
then safety might be a more pressing corporate concern. As it is, they
don’t even lose their bonuses.
The average fine for a health and safety offence was £9,858 in
2003/04 (Hazards 79). But even the rare larger fines –
only 16 so far have broken the £400,000 mark - hardly dent the profits
of larger firms.
| Why
fines don’t work
United Biscuits
was fined £150,000 in April
2005 following the death of driver Steve
Tupman, 46. The company’s trading statement for 2004
shows it had total sales of £1.36 billion for the year. Its
business profits for 2003 were £166.2
million.
British Sugar
was fined £400,000 in February
2005 for safety offences relating to the death
of Lorraine Waspe. Its parent company, Associated British
Foods, made an operating profit of £478
million in 2004. Co-defendant VM Plant Ltd was fined £250,000
but has gone into liquidation so it is unlikely the fine will be
paid.
BAE Systems
was fined £250,000 in November
2004 after is safety failings led to the death
of contract welder Billy Farrell. BAE made a £453
million profit in 2003.
Balfour Beatty
Rail Infrastructure Services Ltd (BBRIS) was fined
£150,000 in October 2004 on charges relating to the
death of casual labourer Michael Mungovan,
who an inquest had early judged was a victim of “unlawful
killing”. Parent company Balfour Beatty Group Ltd made pre-tax
profits of £130 million in 2003.
Construction company Wates
was fined £150,000 in March
2004 for safety offences related to the death
of sub-contractor employee Indergit Singh. The company made
a pre-tax profit of £7.4 million
in 2002.
Sunlight Services
Group Ltd was fined £325,000
in July 2004 for offences related to the death
of employee Paul Clegg. The company made a pre-tax
profit in 2003 of £29.6 million.
RMD Kwikform
Ltd was fined £100,000
in May 2004 for safety offences related to the death
of Mark Warrallo. The company made an operating
profit of £7.9 million in 2002. In November 2002 the
company received a £240,000 fine for safety offences. |
Could BP care less?
Oil giants BP and Shell provide two shocking examples of how even record
fines can be a drop in the ocean to profit-rich British companies.
British oil multinational BP says it takes its corporate responsibility
seriously. A BP report published in April 2005, ‘Making the right
choices,’ says it sacked 252 for unethical behaviour in 2004.
But while some paid with their jobs, the boardroom had a bumper year.
BP’s annual report for 2004 says London-based chief executive Lord
Browne picked up £5,649,000 in pay and bonuses for the year, reflecting
the company’s global success. Several other directors broke the
£1m mark.
The company reported in April this year that its first quarter profits
were $4.72bbn (£2.64bn). All of which means the company and its
board need not be overly concerned by a sequence of record safety penalties,
because even the largest fines could be paid off with an hour’s
profit. And all could be settled from the CEO’s bonus package for
last year.
For example, an August 2003 HSE report highlighted the company’s
lamentable safety performance at its Grangemouth plant, following an HSE
prosecution and £1 million fine in January 2002 – one of Britain’s
biggest ever safety penalties (Hazards 81), but loose change
when quarterly profits are in the billions.
In January 2005 if was fined $1.42 million for safety offences in Alaska.
An April 2004 US report, 'Irresponsible care: How the chemical industry
fails to protect the public from chemical accidents,' put BP at the top
of the chemical industry’s accident list (Hazards 86).
And the tragedies continues. A Texas City BP refinery explosion on 23
March 2005 killed 15 workers and injured 100 others, several critically.
Earlier the same month, official safety watchdog OSHA proposed a fine
of $109,500 (£58,000) against the refinery, currently being appealed
by BP, for an incident last September in which two workers were killed
by superheated steam.
Last August, the agency proposed a fine of $63,000 (£33,300) for
14 serious violations; BP eventually settled for a payment of $13,000
(£6,880) and an agreement to make changes at the plant.
BP leads the US refining industry in deaths over the last decade, with
22 fatalities since 1995 — more than a quarter of those killed in
refineries nationwide, the Houston Chronicle revealed on 15 May
2005.
Shell doesn’t feel fine
The oil firm Shell was fined £900,000 in April 2005 following the
deaths of two workers on a North Sea platform. Sean McCue and Keith Moncrieff
died in a massive gas escape on the Brent Bravo platform in September
2003.
Shell had admitted breaching three health and safety regulations and
received what is thought to be the biggest fine on a company following
a North Sea accident. However, offshore union Amicus has said the fine,
on 27 April 2005, will have little impact on a multinational such as Shell
and says the role of the Health and Safety Executive (HSE) prior to the
tragedy must be the subject of a probe.
Graham Tran, Amicus' regional officer for offshore workers, said: A £900,000
fine represents no deterrent to a company due to announce a quarterly
profit in the region of GBP2.7 billion tomorrow.”
Shell’s first quarter results, released a day after the fine on
28 April 2005, showed it made an hourly profit of £1.6 million in
the first quarter of this year. The penalty is the equivalent of only
two minutes’ worth of the oil giant’s global revenue.
Amicus says one of the charges relates to failure of the company to maintain
equipment – a problem the union had reported on three Shell offshore
platforms, including Brent Bravo, in March 2003. According to Amicus,
an HSE report published three weeks before the deaths said there was no
immediate problem. The union called in April 2005 for an inquiry into
HSE’s role.
Graham Tran said: “We believe a fatal accident inquiry should now
take place so lessons can be learned and questions asked of HSE's equipment
inspection protocols.”
More
on BP’s safety record
BP
sustainability report
More
on the Texas explosion from Confined Space
Shell story The
Scotsman • Grampian
TV • Glasgow
Daily Record • BBC
News Online on the fine and on Shell’s
profits • Amicus
news release
|
A question of guilt
The government’s publication of a draft
manslaughter bill comes after eight years of delays. The decision
to target companies but not their directors has caused some consternation.
Commenting on the 23 March announcement by
Home Secretary Charles Clarke, TUC general secretary Brendan Barber
said: “The TUC recognises that the draft Bill covers a number
of complex areas and we are pleased that the government has agreed
that the legislation should apply to Crown bodies, but are disappointed
that the draft bill does not threaten individual directors with
the ultimate sanction of a jail sentence.”
Unions Amicus, TGWU and UCATT and campaign
group the Centre for Corporate Accountability all called for new
directors’ duties – no-one will face jail under the
proposals, but companies could face an unlimited fine.
The bill has also been criticised for setting
the bar too high, restricting corporate manslaughter to circumstances
where someone has been killed because a company’s senior management
“grossly fails to take reasonable care for the safety of employees
or others.” A jury must also consider whether or not senior
managers “sought to cause the organisation to profit from
that failure”.
A TUC briefing says it will be calling on the
government to include directors’ duties in the corporate manslaughter
law or related measures, and says a range of innovative sentencing
approaches should be considered to cut the death toll at work from
its current unacceptable level of five a week. These include corporate
probation and more innovative financial penalties.
Safety officers’ professional body IOSH
said the draft bill “doesn’t go far enough,” adding
“the test applied for establishing gross management failure
should not be dependent on proving the organisation sought to profit
from the failure to comply with health and safety requirements.”
Draft corporate killing bill – TUC briefing,
available on the TUC
website
|
A lack of official
conviction?
Hazards charts union responses to the government’s corporate
killing bill.
“The draft bill does not require directors to take positive steps
on health and safety. This could mean that the courts will not be able
to apply the new offence of corporate manslaughter in instances where
individual company directors have neglected to maintain safe workplaces.
The draft Bill is a chance to ensure that health and safety is taken
more seriously in the boardroom… and that justice is done when
tragedies do occur.”
Tony Woodley, TGWU general secretary
“Amicus research demonstrates that stronger laws incorporating
director liabilities are the greatest determinant of improving employer
health and safety standards so we will be seeking to ensure that the
legislation allows for individual prosecution… Amicus will be
pushing for introduction of the legislation as early as possible in
the new parliament.”
Derek Simpson, Amicus general secretary
“One area that my union will be making representations on is
the matter of custodial sentences for company directors… It is
the prospect of a jail sentence that will change the behaviour of company
directors not a fine.”
Alan Ritchie, UCATT general secretary
“Safety professionals know that the first line of defence in
ensuring workplace health and safety is compliance with workplace safety
legislation, policed through regular inspection and enforcement. This
draft bill is a welcome addition to that armoury by making rogue employers
who flout the law accountable for their actions.”
Mike Clancy, Prospect assistant general secretary
“This is a tough bill and it has a tough job to do. We want to
stop employers evading justice and give the families of those who are
killed or injured at work the justice they deserve.”
Dave Prentis, UNISON general secretary
“If employers are taking the right precautions, they will have
nothing to worry about. It's the slack bosses, the corner-cutters and
the cowboys who should be sweating right now - the buck will soon stop
with them.”
Debbie Coulter, GMB deputy general secretary
|
