Laws out of balance

16:00, Dec 14 2013
Labour MP Andrew Little
PINNING IT DOWN: Andrew Little's private members bill seeks to add the offence of corporate manslaughter to the Crimes Act.

For a nation with the dubious distinction of having one of the highest rates of imprisonment in the western world, we're remarkably reluctant to lock up anyone from the big end of town.

This may have something to do with the fact that those whose collar is more white than blue are more likely to be able to afford lawyers with the letters QC after their name. It's also partly because criminal cases involving corporate types tend to be complicated, drawn-out, and expensive.

But it's also due to the fact that our laws - particularly the 1961 Crimes Act - are not just inadequate but actually biased in favour of those who either swindle investors out of their life savings or bring about the injury or death of their employees through negligence.

The sad fact is, your chances of going to jail are far higher if you swipe a packet of cigarettes from a service station than you are if you con an elderly couple into investing in a pyramid scheme.

The Serious Fraud Office had a relatively rare victory last month when former Wellington investment manager David Ross was sent down for nearly 11 years for running a Ponzi scheme - although it has to be said that Ross pleaded guilty.

Investors in Hanover Finance never saw any justice from the SFO, which dropped charges against former directors Mark Hotchin and Eric Watson. Far from appearing apologetic at losing other people's money, Hotchin and Watson were indignant, saying they should never have been charged in the first place.


The Lombard Four, including two former ministers of justice, Doug Graham and Bill Jeffries, were convicted but escaped jail time for their part in the collapse of Lombard Finance even though the Court of Appeal later said imprisonment should have been the starting point for their sentence. Graham even got to keep his knighthood.

But at least there are laws in place to protect investors. There is gaping hole in legislation regarding other areas of corporate malpractice, as last week's decision to drop all charges against former Pike River chief executive Peter Whittall clearly shows.

Whittall had faced 12 charges under the Health and Safety Act relating to the deaths of 29 miners caught in the explosion at Pike River Mine. The report of the Royal Commission into the tragedy clearly sheeted blame for the disaster home to Pike River Coal and its woeful health and safety systems.

Yet under the current law, the Crown must prove not only that an employer failed in their duty to protect their staff, but that their negligence was directly responsible for the death or injury that followed. That is a high threshold to cross.

Even so, this was a case of such high public interest and of such importance that the Crown should have proceeded and let the court decide the merits of the arguments. At least Whittall would have had to face his accusers.

It's unfortunate that Whittall made the promise of $3.2 million in compensation payments to the families of the dead miners conditional upon charges against him being dropped.

While prosecutors were at pains to point out the money was not the main reason they withdrew their action, the offer has every suggestion of a backroom deal between lawyers.

That serial litigant Graham McCready is now offering to launch a private prosecution on behalf of the miners' families shows just how far the system has sunk in failing to perform a most basic task - holding those responsible to account.

Just last month the courts threw out another such prosecution, against CNE Security, over the death of an Auckland security guard who was attacked and killed on his first night on the job. The court ruled CNE could not be held accountable for his death.

Even when the Department of Labour - now the somewhat grandiosely named Ministry of Business, Innovation and Employment - has been successful in a prosecution, such as in the Icepak Coolstores case, the penalties handed down have stopped short of imprisonment.

The 2008 explosion at the company's Tamahere coolstore near Hamilton that killed a fireman and injured seven others was at the time once of the worst industrial accidents in the country. Icepak director Wayne Grattan was fined $67,200 and ordered to pay compensation to the firemen.

Meanwhile, the families of the 115 people killed in Christchurch's CTV building collapse in the Christchurch earthquake are still waiting to see whether any charges will be brought against those who official inquiries have named as being at least partially responsible.

As the Christchurch Press newspaper pointed out in a recent editorial, "in all fields of endeavour, the power to make life-and-death decisions must be balanced by sanctions against negligence".

The best way the Government could do this would be to pick up the Private Members Bill of Labour MP Andrew Little, which seeks to add the offence of corporate manslaughter to the Crimes Act.

Unlike in other similar jurisdictions such as the United Kingdom, only a person can be charged with homicide - not responsible companies, their directors, or their senior managers. Little wants to add the charge of "culpable homicide by a body corporate".

Such a grave penalty might well cause directors and senior managers in high-risk industries - particularly forestry, where nine workers have died this year alone - to pause for thought. It might also help persuade the families of those who have died for their job that the law takes their deaths seriously.

Sunday Star Times