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Thursday, September 18, 2014

Saturday, December 1, 2012
OP-ED

Straight Line
Ashulia tragedy

Corporate criminal liability

Public opinion reflected through media reports and comments is of the view that the Ashulia garments factory tragedy that took at least 111 lives, and injured scores others, is another sad episode in our long chapter of industrial establishment disasters.

The High Court has asked the government to explain why it should not be directed to prosecute and punish those responsible for the fire.

The apex court has also decided to form an independent committee to probe last Sunday's fire and intends to ascertain the compensation given to the families of the victims, and also the measures taken for the treatment of the injured staffers.

Going by past experience, nobody knows for sure how all the measures taken and intended to be taken by the executive and the judiciary would provide real relief to these victims. It would indeed be difficult to adequately compensate the surviving victims; whose heart-rending cries and wailings cannot but move even the most stone-hearted.

The reality on ground, however, is disturbing because the fear of authority has almost disappeared. The recurrence of the disasters caused by fire testifies the indifference and callousness of the management about taking safety measures despite repeated and warnings.

That brings us to the increasing concern over the threat to public safety caused by the failure of corporations to provide adequate safety standards for the potential victims.

There has been strong criticism of company management in respect of accidents resulting from managerial incompetence. The questions to consider are: If companies and their senior managers could be exposed to criminal liability for incompetence and failures to act when the safety of the public is put at risk and consequently, if such corporate liability is accepted, how should the law be framed to ensure effective enforcement?

The discussion of aforementioned corporate liability practically relates to the boundary between civil and criminal liability. The civil courts would award compensation when negligence by way of a breach of legal duty of care results in incidents of damage to person and property.

The issue of corporate liability arises in situations in which individuals at the moral centre of the society may be identified as being criminal. This is so because criminal law, from a juridical point of view, was never thought to be an appropriate mechanism for dealing with high-flying corporate criminals.

The impression one gets is that although companies are formally subjected to the criminal law, practically they remain outside its ambit. The present approach which seldom attributes criminal liability to companies or their directors / managers, reflects the general influence of political individualism in criminal law theory.

What follows from the above is that only individuals can act and, therefore, it is right to concentrate attention on the blameworthy individuals.

Naturally, this strengthens the notion of individual responsibility, with intention being the central concept in attributing criminal blame. However, such a view significantly ignores the impact of corporations in the modern world. In reality, the activities of corporations / companies often become a threat to the wider community.

The failings that occurred in recent past in Magurachara and Tengratila, it is alleged, had not been comprehensively looked into and the premonition is that adequate enquiries would have revealed an unusual catalogue of incompetence relating to many levels of operation, management and design.

It might have been possible to identify irresponsible management decisions which contributed to operational dangers and the same could be linked to the immediate cause of accident. One shall not be wrong to presume that a full investigation into the disasters could perhaps lead to the conclusion that the underlying or cardinal faults lay higher up in the company.

The directing complement may not have appreciated their responsibility for the safe management and as such not applied their mind as to the specifics of safety devices. So all concerned in the management should be regarded as sharing responsibility for the failure.

Following these accidents, there were hostile public and media response to the disasters which are suspected to have been caused by corporate neglect and thus there should be concerted action to call for greater retributive punishment which should stigmatise the company and its management.

The relevant query is, had there been an exposure to risk which would justify a substantial term of imprisonment as an appropriate punishment. One needs to know if the company was aware of the risk it was running and that in failing to act it was subjectively reckless. In principle, the company can be criminally prosecuted for causing physical harm and destruction of property.

However, if the normal rules of criminal liability are followed, it would be extremely difficult to establish liability of large companies because the controlling officials are often very distant from where the main activities of the company take place.

In England and Wales the law commission has proposed the introduction of a separate offence of corporate killing. Looking at the definition one finds that

1. A corporation is guilty of corporate killing if:

a) A management failure by the corporation is the cause, or one of the causes of a person's death; and

b) That failure constitutes conduct falling far below what can reasonably be expected of the corporation in the circumstance.

Under Clause 4(2) of the Law:

a) There is a management failure by the company if the way in which its activities are managed or organized fails to ensure the health and safety of persons employed in or affected by those activities; and

b) Such a failure may be regarded as a cause of a person's death notwithstanding that the immediate cause is the act or omission of an individual.

The above new offence points to the liability of failure to ensure the health and safety of persons affected by the activities of a company. The essential element is that liability is attributed for the failure of the management rather than to the failings of individuals. The new offence allows a company to be at fault in a criminal sense through the shortcomings in its policies and operations without any need to associate this with a human agent individually or collectively.

Additionally, the criminal liability of the company will be judged independently of the employees.

The important lesson for us is that companies should be open to both civil and criminal liability because they create the structural context for the individual's conduct. The corporation which appoints the individual should bear primary liability or at least concurrent liability. The aforementioned English law should help us develop a more effective method of attaching blame to a company or corporation. Too much immunity should not be granted to leaders of industry and the senior management of the corporation.

Disasters occurring in Bangladesh are strongly suspected to be attributable to high levels of neglect that should be the ultimate responsibility of the higher management. It is thus only natural that individuals who enjoy many financial rewards and advantages of the boardroom should not be insulated from criminal responsibility when things go wrong. Corporate status must not protect higher management when casualties result from the actions of the company. Our approach should be based on the assumption that irresponsible corporations are criminal and that the directing and managing elements therein stand the risk of facing potential criminal convictions.

The writer is a columnist for The Daily Star.

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