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'CORPORATE KILLING' IDEA OPPOSED

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LONDON-British risk managers are calling for the government to consider making corporate risk management programs compulsory rather than create legislation that would increase companies' exposure to man-slaughter charges.

Deputy Prime Minister John Prescott and Home Secretary Jack Straw both confirmed during the Labour Party's recent annual conference that they are considering drafting legislation that would define a new offense of "corporate killing."

That legislation would be in line with last year's recommendations by the Law Commission, Britain's government-funded legal reform body.

The Assn. of Insurance & Risk Managers, however, criticized the plans earlier this month, claiming new laws would not prevent disasters and were unnecessary.

"While we applaud the spirit behind the proposal, it is fundamentally flawed," said Ina Barker, AIRMIC's executive director.

"Frequently a disaster is the result of a number of factors, not just one. Also, one or two people do not make a single decision which then leads" to the disaster, she said, adding that "circumstances would have involved a number of people at different levels in consultations leading to decisions over quite some time. Where do you draw the line?" Ms. Barker asked.

In addition, AIRMIC claims there is a danger that a corporate killing law might delay compensation claims in civil courts while the outcome of criminal charges is pending.

Instead, the government should focus on making sure companies practice good risk management and are risk-aware, said Ms. Barker.

Risk management is at the "heart of good corporate governance," according to Ms. Barker.

AIRMIC is calling on the government to consider introducing legislation to make risk management compulsory. It is writing to the Home Office to discuss its proposals.

The Law Commission claims the change in manslaughter law is needed because the current corporate manslaughter statutes, which stem from laws back to the 19th century, have resulted in only four prosecutions and one conviction despite dozens of cases involving deaths (BI, March 11, 1996).

According to the commission's proposals, a company as a whole could be prosecuted if death resulted from management practices or standards that fell below what would "reasonably" be expected of a company. Under existing law, a corporate manslaughter charge can only be brought against an individual identified as a "controlling mind" of the company.

In the one successful case brought in England against recreation company OLL Ltd., the business had a single owner. OLL and its managing director, Peter Kite, were found guilty of negligence contributing to the deaths of four young canoeists on a trip arranged by the company. Mr. Kite was sentenced to three years in prison and the company was fined 60,000 pounds ($91,000) in late 1994 (BI, Jan. 16, 1995). In most incidents, it is very hard to pinpoint one executive as responsible.

Under the Law Commission's recommendations, companies found guilty of corporate killing would face unlimited fines, which as fines for a criminal offense would be uninsurable.