Death knell for companies?

High fines anticipated for corporate manslaughter after first conviction

A company convicted of corporate manslaughter has been fi neda 116 per cent of its annual turnover. Cotswold Geotechnical Holdings Ltd (CGH) was fi ned £385,000 last week at Winchester Crown Court, after becoming the first to be convicted of the new off ence under the Corporate Manslaughter and Corporate Homicide Act 2007.

A geologist working for CGH died in 2008 when a trench he was working in collapsed. Th e company was found to have breached health and safety legislation and ignored industry guidance. The company director, Peter Eaton, was previously charged with gross negligence manslaughter and a health and safety off ence, but was ruled too unwell to stand trial.

Gerard Forlin QC, of 2-3 Gray’s Inn Square, who specialises in health and safety law, says: “This company had a turnover in 2008 of £333,000 and was fined 116% of that. It was given a relatively long time to pay—ten years with £38,500 due each year. “I think companies are going to sit up and listen, as fines potentially have to be paid within 28 days according to the Sentencing Guidelines Council (SGC) guidance. In the context of its turnover, this is a high fine. If a fi ne of 116% were made against an oil company, large supermarket chain, bank or manufacturer then you can imagine the impact.

“However, each case willturn on its own facts and on the company’s ability to pay. I don’t think the court was sending out any particular message with this. It must be recalled that the SGC guidance set out the principles in any event.

“However, this case may well put the wind in the sails of the CPS and lead now to more prosecutions of larger organisations for corporate manslaughter.”

Berrymans Lace Mawer LLP partner, Helen Devery says: “Although the fine is less than the starting point of £500,000 recommended by the SGC it will no doubt have a dramatic impact on a company of this size, refl ecting the trend towards harsher penalties.”