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.

Wednesday, 2 January 2013

HSE enforcement at events and the application of Construction Design Management Regulations (CDM) to the events industry.

The HSE has taken over responsibility for enforcement of event construction and is now arming itself with a new set of regulations to do so.  That can only mean more regulation.  In this update the wider events and exhibitions industry is challenged to find its voice in the consultative process in response.


This is the single biggest regulatory change to affect the events industry in health and safety terms in recent years and needs to be taken seriously.  The essential issue is that the HSE, having taken responsibility for enforcement of event construction, are now seeking to amend the CDM Regulations and apply them to events and exhibitions by 2014.   The consultation phase is underway.   E-mails are now flying around with a mixture of concern and comment (some of it ill-informed).   This was flagged up in earlier X-venture updates (see blog site) but my earlier comment has now been overtaken by developments.


Industry opinion on this ranges from being happy to let the AEV et al negotiate a deal with the HSE, to grave concern about what all this portends in the long run, particularly with regards to potential costs on the industry.  Some are concerned that that challenging the HSE will provoke a negative outcome.


I have been fairly vocal in my concerns and notwithstanding soothing noises from the HSE have not seen anything recently that gives me any comfort.   My essential concern is that we are about to get ourselves saddled with prescriptive, costly and unnecessary regulations which will be enforced by the HSE who have little or no knowledge or understanding of our business.   Their initial research was very narrow and superficial.  They reviewed six accidents and made six site visits.  These were all related to entertainment, festival or sporting type activities, one dating back to 1994.  There is not one mention of exhibitions except a reference to ‘other events’1. 


A lot of confusion has been created because these regulations are in theory being pared back to make them less prescriptive which will benefit the construction industry.   The proposal, however, is to widen the scope to include the events industry which is not good for us because if the intention is not to impose more regulation on us then why do it at all?   Whatever has been said, the CDM Regulations have never, since they were first introduced in 1994, been applied to event construction, so applying them now is not ‘just a simple tidying up of the rules’ as it has been portrayed.


One of the arguments in favour of revision is that the introduction of the 1994 regulations had the unintended consequence of spawning a whole new industry of professionals required to interpret and apply these regulations for the construction industry.  Are we not therefore at risk of the same costly unintended consequences when these regulations are applied to an industry for which they were never originally intended? 


There has also been a lot of confusion between regulation of temporary and demountable structures (TDS) and event construction generally.   Responsible organisers and venues ensure that complex structures are properly checked.   CDM however has never been just about structural safety per se but the whole construction activity including all working at height, vehicle movement, site access, PPE etc.   So there are two things going on here.   The HSE is interested in enforcement of TDS guidance and they also want to apply revised CDM regulations to event construction in general.   To illustrate how intrusive that could be, we are potentially talking about every event construction project having to be registered with the HSE in advance.   The term ‘construction’ at present means any build up or break down activity which would also include conferences.  The HSE, when pressed further on this have said that ‘construction’ is legally defined in the regulations.   The definition currently specifically excludes erection of ‘exhibition panels’ – so presumably shell scheme , however in my view the definition is not sufficiently clear as to whether this applies to exhibitions and conferences generally and could be taken either way.   My point is that since the regulations are being reviewed, presumably the definition can also be redefined to specifically exclude exhibitions and conferences. 


The potential issue here is one which risk managers call theoretical legal jeopardy.  Regulations are brought in to target a specific problem such as use of temporary stage sets but are widely applicable to smaller events.  So for example conferences and small exhibitions are not targeted but find themselves caught up in the regulations.  Venues with no desire to tangle with the HSE ramp up tenancy requirements to counter a theoretical legal risk and before long we have conferences required to employ a NEBOSH qualified floor manager.  None of this would have been intended but is analogous to what happened to the construction industry and took 19 years to review.


In the UK risk control is based on what is reasonably practical relative to cost.  Thus far the argument has been based on micro issues in terms of the detail of CDM.  We need to step back and take a look at the macro issues.  In my view exhibition organisers and venues in particular should think about the wider economic impact – ultimately it will be exhibitors who will pay for this as they usually do.   The HSE has taken over responsibility for enforcement of event construction and is now arming itself with a new set of regulations to do so.  That can only mean more regulation and by extension more cost.  There are a number of well-designed, state of the art and well-run venues around the world that would be only too happy to offer a more business friendly approach to events than the UK. 


The solution is simple.  ‘Construction’ as it applies to temporary structures should be defined so as to focus on the intended targets in the entertainment business such as large stage sets.  For example the trigger for CDM could be structures designed to be up for more than four days, over 6m high and over 50 m2 thus all other structures would revert to the status quo.


We need some loud and powerful voices to make the argument for not damaging a successful and profitable industry with unnecessary regulation.




1.    HSE report, ‘Identification of safety good practice in the event construction and deconstruction of temporary and demountable structures’