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Nearly 20 years ago, the “Herald of Free Enterprise” foundered just outside Zeebrugge, Belgium, and 187 people died. Many more were grievously injured. At that time, I was the European Commissioner for transport, the environment and nuclear safety, and I went to Zeebrugge. Without doubt, it was the most shattering experience that I have ever endured. I met the then Prime Minister, the noble Baroness, Lady Thatcher, who went to the local hospital to comfort survivors. I went to see those who were not hospitalised and were able to walk. I will

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never forget their tears, the silences and the hysterical laughter. It was an experience which I will carry to my grave.

All this, and so much more, was wholly avoidable. None of it should have happened. As Mr Justice Sheen said, which we have been reminded of today, a culture of sloppiness pervaded the whole issue. Yet no one was successfully prosecuted, which has been the case whenever larger companies have been involved. I suppose it is due to their devolution of functions, the structures of management and the complex nature of such organisations, but it is not an excuse. A somewhat similar picture has evolved concerning other tragedies: for example, King’s Cross, which few of us will ever forget; the “Marchioness”, which occurred not far from here; the railway disasters; and the manslaughters which took place in many other cases. As a result, 212 workers were killed and many more were seriously injured.

The new remedy of corporate killing was suggested in 1996 by the Law Commission. About 10 years later, we are faced with the present Bill. On 4 December, the Bill had its Third Reading in the House of Commons. Of course, it contains some rational amendments. I welcome the Bill as a considerable improvement on the present position, but, like so many others, I believe that it is capable of being improved. In my respectful submission, there are certain features which still need to be addressed. Of course, a company cannot be sent to prison. However, it has been suggested that other penalties might be imposed; for example, corporate probation. The Government should give their view on that. Why should not the directors concerned face disqualification? Is it not right that companies found guilty of corporate manslaughter should be named and shamed? That does not always happen, but it should. It is right therefore that Ministers should answer these and other highly germane questions.

Another issue which needs to be confronted is that of individual directors who are shown to be involved in the death of people. Under the Bill, corporations may be found guilty after the death of a person, but what sanctions will be invoked against those individuals who are responsible for governing the actions or inactions of such corporations? The Joint Select Committee recommended secondary liability for those who connive, conspire or collude in an act which results in death. Yet the Government have declined to accept that advice. Why on Earth they should do so is beyond me. I cannot understand it. No doubt, my noble friend will enlighten the House. Very shortly, Professor Macrory will produce his report. How, if at all, do the Government propose to deal with the recommendations which will ensue?

My noble friend Lord Parekh said something of enormous importance. This Bill is about the culture of responsibility. In no way should it be viewed as punitive. The parliamentary scrutiny committee said:

I wholly applaud that sentiment, but, equally, it should apply in this country and not only abroad. What has been said in the debate is most important as far as the Bill is concerned.

1.28 pm

Lord James of Blackheath: 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 employees, 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

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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

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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 on the head of an employee 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”.

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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

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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.

1.45 pm

Lord Sawyer: My Lords, I will be brief and probably not quite as colourful as the noble Lord, Lord James of Blackheath. He made me think of my early years of wearing a boiler suit and overalls and working for swashbuckling entrepreneurs, most of whom, rather than enthusing me, sent me running to join the trade unions. But that is another story.

Many of the points on which I want to speak have already been mentioned, particularly by my noble friend Lord Clinton-Davis. Many have been touched on in another place, and I know that colleagues will speak on them today. I am a member of UNISON and was an official for 25 years. I am also the non-executive chairman of Thompsons Solicitors, a leading personal injury law firm, although I am not a lawyer.

I welcome the Bill and strongly support its broad intentions as set out by the Minister. I do not want to repeat what has been said about the incidence of high-profile accidents that have led to workplace deaths except to acknowledge the devastating effect that these have had on individuals and their families. There is a deeply serious weight of history around this debate arising from lives that were damaged and may never recover. That weight of history has provoked an overwhelming public concern that rightly demands a law on corporate manslaughter. The lack of successful prosecutions against corporations has led to the public belief that the law is inadequate and needs to be reformed. There is widespread public concern about the lenience shown to workplace deaths as opposed to the deaths that occur outside the

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workplace. We should remember that we are doing this on behalf of ordinary working people and their families.

I am hoping that the new law will help to change the culture at work and in business and the attitude of companies to health and safety at work. The real benefit of a law in this field would be a dramatic reduction in the number of fatal accidents at work. That is what I would really like to see. When we talk about the law, remedies, penalties and all the arguments that lawyers get wrapped up in, we must remember that we are trying to change the culture of the workplace so that employers increasingly have a culture of responsibility towards working people.

It is important that the Bill builds on the current health and safety laws and rules. That framework is very important; employers and unions are already familiar with it and it works reasonably well.

I want to speak briefly about the responsibility of individuals. I know that there is no real agreement on this; other noble Lords will wish to speak on it and I hope that the Minister will deal with it. Nothing in the Bill will lead to directors who make decisions being held responsible and liable for those decisions. Although the Bill will make it easier to bring corporations to justice after a fatality, those who run such organisations may still not take preventive measures in the future. This matter has been discussed briefly here today and at length in another place. There is a feeling on these Benches that the job will not be properly done if only companies are held to account, but not the individuals who run the company or who contributed to the problem. We must debate this further.

I know that there have been calls for secondary prosecution under the criminal law as well as for disqualification of directors. I am aware also that discussions are taking place with the work and pensions Minister about perceived shortcomings in other areas of health and safety legislation. While director responsibility for health and safety is not directly involved in this debate, it is certainly a related issue. It might be a route to explore to make sure that justice is done. What is needed is an agreed way forward that will ensure that the board of directors and individuals cannot evade responsibility simply through paying fines.

I have expressed concern about the shortcomings of fines as a remedy. A one-off fine may not be seen to be enough; it may not be seen to be fair. Public expectations will rightly be high as a result of the Bill. The public should watch the Bill’s progress and its outcomes very carefully. Will fines be such that the public will see that justice has been done? Or might they lead just to further cynicism? The public have felt in the past that fines have been neither appropriate for nor proportionate with the offences that have been committed. Fines need to be commensurate with the offence. I presume that they need to be commensurate also with ability to pay, which opens up another host of questions about what companies will do. It is widely thought that courts need a wider range of

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remedies. People have spoken about disqualification and scope for wider thinking. I sense that a wider debate about this is going on in Parliament, with the possibility of an amendment about corporate probation being introduced. Without going into that in great detail, I would certainly welcome a serious examination of that approach.

As well as being a lifelong member of UNISON, I am proud to have been given the opportunity to be a director of Britain’s second largest mutual building society, Britannia. It employs 5,000 people. Sitting in the boardroom, as opposed to being a union official all one’s life, gives one a sense of the level of responsibility involved and what it is like to represent people in a different but important way. I and my fellow directors around that boardroom table take full responsibility for health and safety at work. It is dealt with at board level, and so it should be. We all value people and take health and safety very seriously. We also have an enlarged policy on corporate social responsibility, which we should talk about in this debate. It means that we take the safety of our staff and customers very seriously.


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