Home | Massive corporate manslaughter fines could bankrupt firms

Massive corporate manslaughter fines could bankrupt firms

12 February 2010

Corporate manslaughter fines - some running to millions of pounds - could put companies out of business, according to Shoosmiths.

The national law firm says newly-published guidelines reveal businesses and other organisations will usually be fined no less than £500,000 under the Corporate Manslaughter Act, and could be made to stump up £millions.

The Sentencing Advisory Panel (SAP) also recommended that for health and safety offences causing death, the appropriate fine will seldom be less than £100,000, and may be measured in £100,000s or more. 

Offending organisations will also be made to take out newspaper advertisements announcing their prosecution, which could seriously damage their reputation.

Shoosmiths partner and regulatory specialist Ron Reid said: “Levels of fines for offences involving death are going to be much larger than those seen in recent years, and could prove a hammer blow for those made to pay fines running into £millions.

“Even smaller fines for small to medium enterprises could see them struggle to carry on.

“Any organisation yet to consider the substantial risk posed by this legislation must act
immediately, and they’d do well to note this passage from the guidelines: ‘...whether the fine will have the affect of putting the defendant out of business will be relevant; in some bad cases, this may be an acceptable consequence’.”

The SAP guidelines – which only apply to organisations and not individuals – come after months of extensive consultation.

When assessing the level of fines, the guidelines recommend courts look at defendants’ turnover, profit and assets.

Reid said: “The circumstances of each defendant organisation and the financial consequences of the fine will vary from case to case and could lead to companies structured in different ways attracting fines that are vastly different.”

And he warned about failing to report ‘near misses’: “A failure to respond to near misses happening in similar circumstances to those of incidents leading to death will now be considered an aggravating feature.

“So it’s important that all organisations have an effective near miss reporting system and they take remedial action where necessary.”
 
The guidelines also recommend publicity orders – newspaper advertisements and statements on defendants’ websites – to ensure convictions are known to shareholders and, in the case of public bodies, to local people.

Reid said: “This alone could have a seriously damaging effect on the reputation of companies and other organisations. Coupled with heavy fines it could prove disastrous. I can’t stress enough how important it is they take heed of this threat.”

For further information please contact:
Name: Alastair Gray
Phone: 03700 864096
Email: alastair.gray@shoosmiths.co.uk

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