James Hardie directors face the consequences of their poor decisions

SafetyAtWorkBlog has kept a watchful eye on the long saga involving the directors of James Hardie Industries and their mishandling of a compensation fund specifically established for victims of the company’s asbestos products.  The compensation fund story has been handled well by Gideon Haigh in his book on the company.

The saga has since evolved into one of the duties and actions of the board of directors, moreso than one of compensation.  Today, 20 August 2009, the previous directors will be told of the financial and professional penalties determined by the New South Wales Supreme Court.

The ABC News online has an article about the impending court decision but more relevantly to the OHS and compensation issues is the fact that the existing compensation fund runs out in 2011 and the company says that the current economic climate does not allow for any more funds.  For a company that has earned good profits from asbestos over many decades, two years of poor corporate performance does not seem to balance the scales.

Too many corporations are using the global financial crisis to mask their own management failings.  The United States and England have seen this more than most countries.

The ABC was able to interview the current CEO of James Hardie Industries, Louis Gries, who is not as damning of the past directors’ decisions as some might expect, and the reporter, Sue Lannin, asks many direct questions about the company’s responsibilities to victims of its products.  This interview deserves careful listening.

Company directors around Australia are watching how the court case ends and the size of penalties they may face if they make similar decisions.  The OHS element is oblique to the issue of directors’ responsibilities but it is the hot topic in Australia at the moment and many OHS professionals talk with these same directors.  It may be necessary to adjust one’s language or message when talking safety with them from tomorrow on.

Kevin Jones

Why OHS performance targets don’t equal safe workplaces

On 19 August 2009, the Australian Financial Review (AFR) published an article (not available online) about the lack of success of OHS regulators meeting their agreed performance target.  The article is based on the information provided by Safe Work Australia in its 2006-07 progress report.

Below is a chart that WorkSafe’s John Merritt showed at a recent OHS seminar which clearly shows how far the State of Victoria has to go to reach the 2012 target, and it is one of the better performing States.

vic_ohs_johnmerritt_leadership_080804 graph

The Australian Council of Trade Unions (ACTU) has placed its hope for improvement in the upcoming harmonised OHS laws.  Jeff Lawrence is quoted in the small AFR article from the ACTU media release:

“Australia has a long way to go before success can be claimed on achieving national targets for workplace death, injury and disease,” Mr Lawrence said.  “With proposed uniform national occupational health and safety laws, we have a once-in-a-generation opportunity to lift protections for workers by achieving the world’s best safety standards for the entire country.”

Jeff Lawrence and the ACTU need to remember that harmonised OHS model laws have never been about improving workplace safety.  They are about setting the legal framework within which employers and employees improve safety in their workplaces.  Safety improvement comes from the management of risk and hazards, not whether it is easier for a union to get onsite or for a company to be more easily prosecuted or for fines to be set at record amounts.

(In fact until recently, Australian lawyers and some OHS lawyers acknowledge that fines do not work for anything other than punishment.  Other legal penalty options have been promoted for some time but these seem to have been ejected from the proposed National OHS law.)

The ACTU, and the employer groups, need to start assisting companies to reduce hazards,  not only the sites or industry sectors of their own members.  Unions are often keen on pushing corporate social responsibility but do not promote safety outside their member organisations.  So where is their own corporate social responsibility?

The principal motivator of the union movement in Australia has always been industrial relations, of which OHS is of occasional relevance.  Though it is acknowledged that in some specific union sectors, particularly the emergency services and construction, safety has a higher priority than elsewhere.

If the union movement was genuine about improving the lot of Australian workers and of the importance of safety, assisting in the education of business operators, outside their own union sector, to improve safety may show to some workers that being a member of a union may be a good thing.

As has been discussed elsewhere the OHS performance targets of the regulators are purely academic.  Former Prime Minister John Howard introduced the concept of “aspirational targets” to the Australian political lingo and the current OHS targets were set during his government.  Aspirational targets are those that you sort-of try to reach but if you don’t, it doesn’t matter, as there is no penalty.

If the regulators were genuine about reaching this target, the enforcement of OHS would be substantially different and harsher.  The technical assistance for business to improve safety would not rely on the regulators alone or some token business consulting funding.  But the targets have no big “stick”,  the legislation is in a state of uncertainty, the unions have limited influence, and the community’s awareness of workplace safety is up but still only a trickle on their decision-making radar.

The targets also have no “carrot” other than a media opportunity to say that one State OHS regulator performed better than another, and that will surely create harmony.

No enforcement + no penalty = no effort.

Kevin Jones

River death leads to OHS prosecution

The prosecution of a New Zealand adventure company, Black Sheep Adventures, over the death of Englishwoman Emily Jordan has received more press in England than in Australia but the case should be watched by all OHS professionals.

One report provides a useful summary of the fatal incident

“Emily Jordan drowned while riverboarding on the Kawarau river in New Zealand’s south island in April last year [2008].

The 21-year-old former Alice Ottley School (now RGSAO) pupil was travelling with her boyfriend after graduating from Swansea University with a first class degree in law.

The riverboarding company Black Sheep Adventures Ltd and its director Brad McLeod have been charged with failing to ensure the actions or inaction of employees did not harm Miss Jordan.”

The same article is an illustration of the importance of regular communication with the family of the deceased by the Authorities, even if the parties are on opposite sides of the globe.

The family established The Emily Jordan Foundation and a eulogy about Emily is available which provides a clearer understanding of what was lost in this tragedy.

Black Sheep Adventures have also been charged under the Health and Safety Employment Act 1992, with failing “failure to take all practical steps to ensure the safety of employees and the prevention of possible hazards.”  The company and its director have pleaded not guilty.

The Birmingham Post is continuing to cover the case including the start of the trial due for next week.

Maritime New Zealand who are prosecuting the company instigated a review of the river boarding industry in late 2008.

Kevin Jones

Do health professionals make the best OHS leaders?

David Michaels has been nominated by President Obama as the new Assistant Secretary for the Occupational Safety and Health Administration in the Department of Labor.  (A brief profile of Michaels is available HERE.)  A posting at a US Workers’ Compensation website links through to a discussion on the potential impacts of the Michaels’ appointment.

There are several telling quotes in the podcast.  Sidney Shapiro, a law professor at Wake Forest University, says that OHS achieves more when run by someone with a health professional background.

“…I think it’s important that we know that David Michaels is a health professional.  And I think OSHA’s done best when it’s had administrators from the public health community.  It is, after all, a public health agency.  More times than many of us would wish, it’s been headed by someone who’s been an adamant critic of OSHA and has come from industry or been an industry lawyer.”

Whether this position can be applied to regulators in other jurisdictions is an interesting question.

The Chair of the UK HSE Board, Judith Hackett,  has a background in petrochemicals.  The CEO of the HSE, Geoffrey Podger, has a background in the civil service, health and food safety.   The chair of the Safe Work Australia Council, Tom Phillips was the former CEO of car manufacturer, Mitsubishi, and has served on a range of industrial company boards in South Australia.  The Chair of WorkSafe BC board, Roslyn Kunin, harks from human resources and the labour market.   Greg Tweedly CEO of WorkSafe Victoria has a background in insurance and compensation.  Nina Lyhne of WorkSafe WA comes from road safety and compensation.

This unrepresentative sample shows a mix of experience and not all from health promotion.  If the list was comprehensive, it would be interesting to see if Shapiro’s comments stack up and to see how many trade union officials have moved to “the top” or will simply remain “on the board”.

The Living on Earth podcast includes the following quote from Michaels from some time ago:

“What polluters have seen is that the strategy that the tobacco industry came up with, which essentially is questioning the science, find the controversy and magnify that controversy, is very successful in slowing down public health protections.  And so the scientists who used to work for the tobacco industry are now working for most major chemical companies.  They don’t have to show a chemical exposure is safe.  All they have to do is show that the other studies are in question somehow.  And by raising that level of uncertainty, they throw essentially a monkey wrench into the system.”

This statement could generate optimism for OSHA’s future but there are many examples of the views of environmentalists changing once they move into the corporate world.  Politicians like Australia’s Minister for the Environment, Peter Garrett, is an obvious recent Australian example.  Harry Butler in the 1970s was roundly criticised for “selling out” to the petrochemical industry.

However, the appointment of David Michaels pans out, it will be an interesting one to watch, particularly if the US Democrats can stay in power for more than Obama’s two terms.

Kevin Jones

Corporate manslaughter and accountability

Corporate manslaughter, or industrial manslaughter as it is referred to in Australia, was not allowed to gain traction in Australia, except for in the Australian Capital Territory.

3i14 coverThe policy has been allowed to fade from the books of most of the Australian left-wing parties but for a while, corporate manslaughter was THE issue.  In fact over the last 10 years, it has been the only time that directors and CEOs from thousands of companies have paid serious attention to safety management.

The offence of corporate manslaughter seems to have lost little of its momentum in England.  Recently England instigated its first prosecution for corporate manslaughter.

It reminded SafetyAtWorkBlog of an interview we conducted with David Bergman on the issue in April 2002.  David Bergman has been the Executive Director of the Centre for Corporate Accountability for ten years and, only last week, was part of a conference in London on “Directors’ Duties, Corporate Manslaughter and Safety Enforcement“.

Below is the text of that 2002 interview

Manslaughter Lobbying – 2002 Interview with David Bergman

David Bergman is the CEO of the Centre for Corporate Accountability (CCA) located in London, England.  He spoke exclusively to [Safety At Work magazine] about the issue of “corporate killing” legislation and the activities of his organisation.

SAW: Can you provide an outline of what the CCA does?

DB: The organisation is a not-for-profit organisation. Its core purpose is to promote worker and public safety and it does this by focussing on two ideas – improved law enforcement and greater corporate accountability. We have three main activities, we run a work-related death advice service which is a core of our work whereby we provide free, independent and confidential advice to families bereaved from work-related death on how to ensure that an adequate criminal investigation is undertaken into the death and that the evidence is subjected to proper scrutiny by prosecuting bodies who have the duty to determine whether criminal offences have been committed.

We give that advice because, traditionally in Britain, lawyers whom families may go to are often only concerned with issues of compensation. We are concerned with issues of corporate criminal accountability.

We also undertake research into the role of the criminal justice system in the investigation, prosecuting and sentencing of companies and those who control them.

Finally we undertake some lobbying work. We try to lobby for appropriate changes to Law and practice in this area.

SWA: Is you lobbying receiving a sympathetic ear?

DB: There are two focuses of our lobbying. There’s the central Government and there is an organisation that is at arm’s length of the central Government, the Health and Safety Commission and Executive. Different departments of the central Government are responsible or different activities.

In Britain we lobby two Government departments. The Home Office is responsible for traditional criminal law and therefore the whole issue of the offence of manslaughter and how it applies to companies. The other department is Transport, Local Government and Regions which is responsible for general safety issues and has an oversight role of the Health and Safety Executive and Commission.

The Government has promised reform on the law of corporate manslaughter and on the sentencing of companies. In relationship to that we lobby the Home Office. It is difficult to say whether we are effective or not as the Government has committed themselves to making this change but it has been a long time coming and there is no Bill before Parliament and it clearly is not a priority of the Government which is why, of course, we need to lobby.

SAW: Sometimes there are activities in the justice system which can work counter to your lobbying or the will of the people. Have you seen evidence of that?

DB: The Courts can only apply the current Law as it stands. If you want change, this will come through changing the Law or changing the policy of the investigation and prosecution bodies to ensure that more cases come to the Courts. It is true to say that in terms of levels of fines there has been the traditional problem in ensuring that the Courts impose sufficiently appropriate fines commensurate to the offences committed when that offence has been committed by the company or individuals who control them. That would be the main criticism of the Courts, but beyond that the Courts can only apply the Common Law and also can only deal with cases that come before it.

So if there are deficiencies in the Law, that’s not the fault of the Courts, that’s the responsibility of the Government to change. And if there is a failure on the investigation or prosecution bodies to investigate appropriately or fail to prosecute particular companies or individuals; that is a failure on their part and that is where we need to change practice.

I wouldn’t saw that the Courts are a core part of the problem.

SAW: What has been the response to your lobbying from some of the employer and business representative organisations?

DB: We have been involved in establishing coalition campaigns on safety law and corporate accountability that bring together safety organisations, trade unions and families bereaved from work-related deaths. There are two core issues – the reform of the law of manslaughter and the enactment of this new offence of “corporate killing” as it is referred to in Britain, which the Government is committed to but to which no priority is being given.

Secondly there is the imposition of safety duties on company directors. At the moment under British Law, there are no clear safety duties imposed on company directors, safety obligations are placed on employers or manufacturers. Directors, as separate legal entities from the companies, have no clear legal obligation to ensure that the company complies with safety law.

The two groups mainly in opposition are the Confederation of British Industry (CBI) and the Institute of Directors. There is recognition by industry that a new offence of corporate killing will be enacted and there is a sort-of acceptance. What they’re doing is lobbying to make it more difficult for companies to be convicted of the offence.

The Institute of Directors is lobbying against legal obligations on company directors. Although the Labour Government can well be said to be more interested in safety than a Conservative Government they do listen carefully to what industry says.

SAW: Recently the Australian Industry Group had some concerns with the Industrial Manslaughter Bill that is currently in the Victorian Parliament in Australia. One of their concerns is there needs to be an emphasis on education and not retribution. They don’t believe that such an Act will promote safety, it will only penalise

DB: Our response to that sort of argument is that, first of all, under current law companies escape any form of accountability, even for very serious failures on the company management’s part. Normally there is a situation of immunity and companies don’t get prosecuted for serious offences. That has two effects – a lack of moral justice and a sense from bereaved families and the community that there are some legal entities that are not accountable. There is a problem in the social fabric.

Secondly, if there is immunity under Common Law, and companies know that they can escape accountability, there is inevitably going to be a lack of deterrence in the system so that some companies will feel that we don’t need to change our safety management systems because it is unlikely that there is any serious impact if something goes wrong.

Companies, of all legal entities who get caught up in the criminal justice system, are rational beings. If there is a sense that there will be more cost for them by taking a particular action than if they don’t take a particular action, they won’t take that action. Individuals commit offences for all sorts of reasons which are irrational while corporations operate from a much more rational base. So they are much more likely to be deterred.

In our view, these changes are important for accountability issues which the argument that you mention does not deal with. They are also important for deterrence which links directly back to safety. That is not to say that, hand-in-hand with other approaches for change in criminal law, there ought not to be attempts to ensure that companies are able to comply with safety law so that offences aren’t committed.

SAW: The AI Group says that Government has failed to provide any evidence that such a law will reduce the level of workplace death and injury.

DB: If you look at any reform in Criminal Law, there is never any evidence to say that if we change the law in this particular way there will definitely be a reduction in the number of deaths, or whatever. The fact that you may reform the law of murder in one particular way doesn’t necessarily mean that there is a reduction in murders.

You ask industry to show in any research in relation to any other Criminal Law reform that says “we’re going to change the law because if the law is changed there is evidence to suggest that fewer offences will be committed or fewer deaths will take place.” It just doesn’t happen. That’s not the way that Criminal Law reform happens.

Criminal Law reform takes place because there is a perception of a lack of justice.

This argument doesn’t carry any weight because there is never any evidence that a particular legal reform is going to cause a particular change but what you can be sure of is that there will be greater accountability and you can speculate that there will be greater deterrence.

SAW: Some people assert that an Industrial Manslaughter offence will encourage a change in workplace culture.

DB: The thing about changing corporate culture is that you are more likely to change it when you change the Law. That’s the important effect that law reform has, it changes the perception about a particular conduct. I would argue that changing law would have an important effect upon the corporate culture. There is no question about that.

The problem with a lot of the corporate social responsibility arguments is that they are all about voluntary codes and about trying to get companies to do particular things. There will always be some good companies that will comply with them. Compliance with those codes doesn’t get to the companies who will commit offences anyway.

SAW: The UK has had some high profile cases that generate discussion on corporate manslaughter. We have covered some of those in the last few years. But one that seems not to be going away is some of the issues associated with Railtrack, the privatised rail transport company, after some very public fatalities and incidents. Are they incorporating accountability into their new organisational structures?

DB: Clearly, after the Paddington disaster and others, rail safety became a priority in this country. I would say that this was a very good thing but it also subsumed attention to other industries where there is a far higher level of death and injury, like the construction and manufacturing industries.

Those disasters were partly responsible for increasing the debate on the need for a new offence on corporate killing, for Directors’ safety duties and also, the reason why the Government decided to take Railtrack out of private ownership.

Families of victims from the Paddington disaster are still pushing for the application of corporate manslaughter against Railtrack. The Crown Prosecutor initially refused to prosecute for manslaughter however the families have got the Crown Prosecutor to reconsider that decision.

SAW: Have you had any interest in the moves on corporate killing from outside Britain?

DB: Australia is the one country where it has been addressed. Canada has put in some important reforms in this area recently.

If there is reform in the area of corporate killing in the next few years, there might be an impact on other jurisdictions.

Kevin Jones

This interview appeared originally in Safety At Work magazine Vol. 3 Issue 14 on 30 April 2002.  It remains Copyright – Workplace Safety Services P/L

A slap on the wrist – Varanus prosecution

The West Australian government has finally decided to prosecute Apache Energy over the Varanus Island explosion in 2008.  Many people are asking if the effort is worth the bother as the maximum penalty possible is a measly $A50,000.

Comparing the disruption to the state’s gas supply to the Esso-Longford explosion, which generated a Royal Commission in Victoria, it illustrates the difference in having an explosion in an isolated area, that does not kill or injure, and that allows a government to ensure domestic gas supplies.  One could argue that a major difference was also that WA did not rely solely on a single gas source.

According to one media report

Apache spokesman David Parker said it would vigorously defend the matter. “The explosion was an unfortunate and unforeseen event”.

Explosions often are unfortunate and usually unforeseen but adequate maintenance requirements of pipelines are foreseeable, just not often profitable.

Apache Energy, a subsidiary of the US energy giant Apache, has not been the most transparent and helpful corporate citizen as it has taken Federal Court action that impedes the government’s investigations.

Kevin Jones

More on the Varanus pipeline can be read by searching for “Varanus” in the search function to the right of this blog page

Swine Flu – isolation – a personal view

Australia’s swine flu numbers are increasing and the government is introducing new measures regularly in response. I write this post from self-imposed isolation from the swine flu outbreak in my son’s high school.  There are some interesting decisions that have been made which provide me with optimism but also illustrate some useful personnel management actions.

I heard about a confirmed case of swine flu at the high school at my son’s soccer match last Sunday.  I was asked by a soccer mum whether my son knew a boy at his high school who was a confirmed swine flu case.  He did and we had not heard.

When I returned home there was no message from the school on my answering machine and nothing on my mobile.  I looked on the internet and the case was reported but more importantly the school was to be closed for a week.  I confirmed the media report by looking at the local health department website.  The case and control measure was mentioned.

However, what does it mean in the broader context when a school is closed?  Is my son in “isolation”? Are the other family members?  The websites could not help with this so I rang the helpline listed on the website.  Yes, my son should have no contact with people outside the house and we should monitor his health, and that of others in the household, for symptoms.

I knew my employer had issued an email from Human Resources in late April advising what to do in the case of an outbreak of swine flu.  However, this is not much help for the days prior to symptoms or confirmation of the infection.  As I am not in isolation I could be going to work as normal and potentially and innocently infecting work colleagues – not a good risk control.  (I have written elsewhere on the matter of presenteeism, here was a preventative opportunity)

I put some risk management questions to the employer even though my advice would be to have me work from home.  Within 12 hours, my employer had set me up to work from home for the rest of the week.  The IT adviser emailed me a procedure entitled “Flu Pandemic Remote Access”.  I commented that I was a little surprised that the company was this prepared.  The IT adviser said it was only new and I was the first user.

My wife’s employer is still assessing the situation but we are of the same opinion that if work can be done from home, we should be located at home for the remainder of the isolation period.  We are lucky that our occupations afford us this option.

On Monday morning the school rang me to answer any questions about swine flu.  I didn’t ask any as we had done our homework and arranged to go to school to collect some of my son’s schoolwork for his time in isolation.

It could be asked why the school waited 24 hours to notify me? How does any company or organisation contact up to 700 people on the weekend?  These are issues that are currently also being discussed in a Royal Commission into Victorian Bushfires in Melbourne.  The school had all of its staff and teachers on the phones after a meeting at 9.00am that morning.  The school’s website did not get an update until Monday morning but not everyone turns on their PC on a Sunday.   In the context of the slow encroachment of swine flu in Australia, I think this was reasonable.

It should be noted that although my son was friends with the infected boy only the immediate classmates were provided with Tamiflu and that this occurred on the Sunday – a fair response.

Anticipating the family being at home for a week, I purchased some supplies including a thermometer as a useful way of identifying  at least one of the swine flu symptoms.

Two days into isolation and there are no symptoms.

From a professional OHS perspective, communication has been acceptable. Available online information was okay and company support reassuring.  At this early stage of the outbreak in Australia, we are optimistic and not worrying ourselves over issues over which we have no control.

Kevin Jones

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