Corporate Manslaughter and Corporate Homicide Bill

My Lords, I am not a lawyer, but I come to this Bill from the perspective of someone who has spent most of his adult life in boardrooms, living with the shadow of corporate homicide or manslaughter to be worked around or dealt with all the time. I am broadly supportive of the Bill, but deeply concerned that it may have a number of reverse effects to those that are intended. It must not take away or replace existing legislation to the extent that it weakens the ease and swiftness with which remedial action can be taken if an event occurs. In addition, we must remember that, if corporate manslaughter has taken place, we already have a dead body, so we have already failed. Therefore, the concern is how we can make the Bill work in such a way that it will act to save lives rather than just to enable remedial action afterwards. I have eight concerns with the Bill as it stands. I shall run through those concerns and then, if I might burden the House, I shall refer to several case studies drawn from the 12 instances that have ended up in deaths over the past 30 years or so, and consider how those cases will play in the context of the Bill as it stands. My first concern is that the definition of ““corporate manslaughter”” appears far too broad. It needs to be much more precise and provide some kind of route map for company boards to follow through a decision process to avoid what might otherwise lead to a catastrophic decision. They need more help than the Bill offers at the moment in doing so. No board ever sits down with an agenda to develop a strategy to kill its employers, customers or the public. It is usually some tiny, imperceptible decision that is made, quite innocently at the time, and one thing leads to another. We need to get people to think within the discipline of a structured approach to stop the nonsense that occurs. Secondly, no weight or significance is attached in the Bill to the motives that may have led to corporate manslaughter. This is a major deficiency, particularly when giving guidelines to juries about how they should assess whether there was a financial incentive. Often there will be. In some of the cases that I will identify, there were massive financial incentives, which resulted in benefits to the company when it managed to kill someone. The borderline between manslaughter and murder is quite narrow but it needs better definition. I am thinking particularly of a situation where someone’s negligence results in the death of an employee in trying to put on pressure to complete a contract ahead of time to avoid a penalty clause. There is a financial inducement to the company to do so and such cases should carry the risk of a higher penalty if they occur. Such cases are not reflected anywhere in the Bill. Thirdly, the Home Office commentary notes provided with the Bill are not entirely helpful. Sometimes they appear to conflict with the wording of the Bill. Corporate manslaughter is not executive manslaughter and there is confusion in the wording as to the crossover between executive action and corporate action, which I take to mean board action. That needs serious clarification; otherwise it will provide a board’s charter for buck-passing on to lower levels of authority within the company. That is a very important point. Fourthly, I am very unclear, after numerous readings, as to whether a prosecution could run separately against the corporation at board level only, or whether it must necessarily entail a parallel and separate prosecution of one individual in authority. The drift of the discussions today appears to be that that is completely wrong. But I draw attention to paragraph 54 of the Explanatory Notes relating to Clause 16, which appears to be in conflict with the wording of the Bill on that issue. That matter needs address and probably correction. Fifthly, I am surprised at the limited jurisdiction that applies in the Bill, as many of the most dangerous assignments that emanate from a board in this country relate to putting employees, consultants and advisers in harm’s way in foreign countries way beyond the jurisdiction presently intended. That is a very big, undesirable diminution of responsibility given the number of people who are now engaged, for example, in rebuilding programmes in Iraq and so on. It is a hole in the Bill that needs to be urgently addressed. The Bill needs a bigger geographical jurisdiction. Sixthly, there is no reference to a failure of a duty of care on behalf of foreign nationals who might be working for a British-based company. Often you will end up inadvertently having foreign nationals sucked into a work process that leads to the death of such individuals along with the British. If the instruction comes from a British board and is made in Britain, surely that is the jurisdiction that should apply, no matter where we kill anyone around the world. Seventhly, one of the biggest concerns is that the Bill appears to downplay its implications for the public as opposed to employees. It is too concerned with the death of employees and not enough with the death of members of the public that might be caused by incompetent action unleashed by a board. Finally, the Bill is wholly concerned with manslaughter, which equals death, and not enough with the halfway stage of the very serious consequences of severe personal injury, which ought to be brought within the same compass. That is a very important point. As to penalties, it is bizarre that if, as the chairman of a company, I make a decision that is clearly attributable to me and which results in the manslaughter of an employee, I should then be able to say, ““It’s the board that’s done it. I am not going to be part of that responsibility and, in any event, the company as it is corporate will pay the fine, so I get off scot-free””. There has to be some personal identification of responsibility and penalty for individuals who make the decisions going up to the top. Having expressed those eight concerns, I shall now give some examples of how manslaughter situations have potentially arisen in the past. The Bill in its present form is far too simplistic; it is almost at the level where it is fine if you drop a ton of bricks onthe head of an employer because that is quite straightforward. On the other hand, that is not the way in which corporate manslaughter occurs. Boardrooms are much more complicated than that. As a start point, let me give the example of a simple case that occurred in 1981. I offer it as the first case because it would still have the same consequence today. It is the only one of my examples that went to court, where a significant award in damages was fairly given. It concerns a foundry operation that had just succeeded in making the biggest ever flat-faced casting in history—it was 14 feet high and weighed five tons. The foundry was very proud of itself. When the casting came out of the furnace, it was glowing red hot and the board decided that it would be wonderful to take a photograph of it for the purposes of promotional material. They lined up the photographer and asked for two volunteer employees to stand in front of the casting. However, they did not allow for the fact that the non-glowing side of the casting would cool faster than the red-hot side. The casting became unbalanced and toppled over, and the employees were both crushed and cremated at one stroke. Such a case would probably have the same consequence under the Bill as it stands today. It was adequately covered by health and safety legislation at the time. Although I do not think that the Bill provides anything new, nothing is lost in terms of its impact. My other examples are much more complex. The second one involves a company that, in 1982, won a contract for fitting out television studios that were being built at Basra and Kirkuk in Iraq—names now familiar to us in another context. It was a big contract and involved employing a project manager in Iraq who had to be an Iraqi national. I was chairman of this company. We recruited a Christian Iraqi to be our onsite manager for these two projects. After a while, we ended up being owed £9 million by the Iraqi Government, with no payment forthcoming. We were covered by ECGD and had secured a loan from the Bank of Scotland for the £9 million, but we had to repay it. The bank was pressing us and we were facing potential bankruptcy. I called the site manager to England to decide what we would do. He said that we would have to go directly to the Minister for industry, who was the end customer in Baghdad, and demand payment. I said, ““Go and do it. Can you get a meeting with him?””. He said, ““Yes, I think so””. I said, ““How do you do that?””. He said, ““I will have to talk to his secretary and it will be a matter of negotiation””. I said, ““What does that mean in real speak?””. He said, ““I will probably have to slip him some money to get the appointment””. I asked, ““Is that normal out there?””. He said, ““Yes, it’s the only way you ever get an appointment””, so I told him, ““Do what you have to do””. Those may have been fatal words, because he went back to Baghdad, slipped $50 to the secretary to the Minister for industry, was caught doing it on video, charged with a crime against Allah, put on trial and sentenced to death. Twelve weeks later he was hanged—a strangulation hanging—on a lamp post in the middle of Baghdad, all his assets were taken away and his wife and six children were put out on to the street to beg and die. This was totally motivated by money—we needed that £9 million—and there is a serious question about executive responsibility. One knew that he was putting himself in harm’s way and did not stop him doing it, but the greater priority was to get the money; the board acts on behalf of the shareholders and of the financial interests of the company’s banks to do what it can to sustain the financing. As I look back on that case, it worries me. The irony was that, in the immediate aftermath, Saddam decided that he wanted to invade Iran again, so he immediately sent us£9 million in American money and proceeded to offer us an incentive to accelerate the completion of the work so that he had studios available in which to put out films of his great new military victories. My second example—which also, in retrospect, concerns me greatly—relates to a company that had the contract for repairing the pipeline that flows between Port Darwin in the north of Australia and Papua New Guinea—a very narrow and shallow water. It was so vital that this was done quickly that a clause in the contract said that if we did not finish by midnight on a certain date we had to pay a £3 million penalty. One Saturday night—the date by which we were due to finish—I got a phone call from the skipper of the diving ship to say that he was in a force 8 gale, could not complete by midnight and had to stop work. That would have been fatal for the company. I said, ““You must continue””, and he said, ““I need an order to do so because I think it is dangerous””. I said, ““Do it. Get your divers to volunteer and pay them all a £5,000 bonus if they complete by midnight””. Half an hour later, the skipper was back on the phone, saying, ““We followed your instructions but we have a dead diver. He’s been washed away””. The diver had done something particularly stupid, and I think that there is an issue here which is not clear in the Bill. He had indulged in a practice called riding the wire. You come up without the diving bell by shinning up the control rope to the diving bell. This Australian gentleman—not named Shane Warne, unfortunately—decided to shin up the wire and got washed away in the process. The sting in the tail of this story is that, because I had a dead diver, I had adequate grounds for claiming force majeure not to pay the £3 million. I had a direct financial value relating to having a dead diver. Had I realised that in advance and sought to engineer it, I would have had a case of murder. I seriously doubt whether the workings of a corporate manslaughter process, unless the jurisdiction extends to it, would be otherwise identified by any other police authority to the point where it would investigate that sort of action which led to a death. The company was owned in Britain and the diving boat was owned by Britain. The Bill is ambiguous: does the fact that a British boat is used extend the jurisdiction, even if it is not in the waters that the jurisdiction is said to cover? That needs clarification. My final example relates to a wider mass killing potential, although in this case it did not happen. In 1989, it was discovered that one of my companies was manufacturing what came to be known as the Iraqi supergun. The supergun was sent out to Iraq and submitted for a test trial at Babylon, whereupon it promptly blew up and killed all eight members of the test team of the Iraqi army. Some might say that it was their tough luck—a bad day at the office. However, the Iraqis immediately ordered replacement pipes and, by then, it was clearly known what the pipes were for, so the company could not claim that it thought that they were for a petrochemical plant. There ought to be a wider concern for the failure to adopt proper disciplines for end-user certificates, and so on, and for proper export controls, which were breached in that case. Those breaches should also represent cause of corporate manslaughter. I am sorry to have taken up so much of your Lordships’ time, but it should be understood that these issues have wider implications and are much more complicated than the Bill anticipates.