Wednesday, 9 January 2013

Corporate Manslaughter - the Lion Steel Case. Are there implications for event directors?


Many would argue that legal action against a company and its directors following a death at work was fully justified.  The case however does raise important concerns regarding the prosecution of individual company directors.

 

In 2008 a maintenance worker for Lion Steel fell from the roof to his death.  The company was charged with Corporate Manslaughter and offences under section 2 of the Health and Safety at Work Act (HASAWA).  Three company directors where charged with Gross Negligence Manslaughter and offences under section 37 of the Health and Safety at Work Act.  In July the company, which has a turnover of £10 million, pleaded guilty and was fined over £480,000 plus £84,000 in costs.  The directors who went to trial were acquitted in a plea bargain arrangement.  The CPS presented evidence of a lack of training, no risk assessment, no safe system of work and lack of supervision.  The facts which lie behind this case should be of concern to all directors and event company directors in particular for a number of reasons.

 

Firstly the Crown Prosecution Service (CPS) tried to establish a de facto ‘carte blanche’ duty of care for all directors to all employees by virtue of their office.  The judge ruled against it on this occasion, but it does not mean that the CPS will not do this again.  Previous attempts to establish a specific Director’s Duty in law have not come to pass but it could come into place by way of case law in a future case.  Part of the reason that it failed in this instance was that it was hard to establish a direct link between the actions of the directors charged, one of whom was the finance director, and the operative on the roof. 

 

The case against the directors did not fail.  They entered a plea bargain arrangement whereby they allowed a guilty plea of corporate manslaughter against the company, in return for the charges against individual directors to be dropped.  It is not hard to see why.  The Directors were facing a range of punishments including, custodial sentences of 2 years to life imprisonment, fines and disqualification from holding a directorship for up to 15 years.  Their trials and the threat of a heavy custodial sentence could have been drawn out over four years possibly resulting in professional and financial ruin even if they were found not guilty.

 

It raises the disturbing question as to whether the CPS deliberately brought these charges against the individuals in order to leverage a corporate plea.  If this is the case we could see more cases of directors automatically potentially facing life imprisonment following a death at work.  And what of these directors’ fiduciary duties to the company and its shareholders?  Surely there was a conflict of interest in sacrificing the company to defend their own cases.

 

Lastly the CPS did not rely on witnesses.  Instead it used documentation and e-mails dating back to 2002 to support its case.  This underscores the need for careful attention to archiving of key documents to prove that directors are routinely discharging their duty of care, from issuing and implementing a proper health and safety policy to ensuring that there are safety files for each event.

 

The law of corporate manslaughter was brought in to target companies and not individuals and yet it appears to be having the perverse effect of encouraging the targeting of individual directors in order to secure a conviction against the company.

 

Lion Steel was not a corporate behemoth, its pre-taxed profits ranged from £187,000 to £317,000 and its highest paid directors received £88,000 per year.  It now faces a struggle to survive commercially with such a hefty fine which they must pay within three years.

 

So what lessons can we derive in the events industry?  Firstly the events business has had its fair share of fatalities; work at height and event construction activity place us at the higher end of the risk scale as an industry.  It is for this reason that the HSE have decided to enforce safety at the construction of events (see previous updates).  The safety industry commentary was critical of the CPS in targeting individuals in this way1.  In the events industry it would be a lot easier to establish a link between the actions of individual directors and the activities on the event floor particularly with the portfolio structure of most organising companies where senior directors are clearly responsible for specific events.  Any director who is part of the structure of a venue management team would also have clear links with operational activities which would be easy to establish in court.

 

Responsible organisers and venues already proactively manage risk.  This case should prompt a shakedown of policy and procedures in those companies that do not have robust risk management processes.  All companies should look carefully at their major incident handling plans in terms of processes in place to defend the companies and its directors against charges of corporate or individual gross negligence manslaughter respectively.

 

 

Note.  1.  Safety and Health Practitioner August and September Issue, Health and Safety at Work October issue.

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