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The past few weeks have seen much discussion on whether the current tax regime is making the UK an unattractive option for businesses to establish and invest here.  Whilst this debate has raged, another threat to the competitiveness of the UK has passed without great comment.  As part of the Corporate Manslaughter Act the Courts have the power to impose a publicity order against any business found guilty of the offence.

Although the main penalty proposed to punish the offence is potentially a massive fine, up to 10% of annual turnover which could in itself be crippling to the extent of driving the guilty out of business, it is the publicity order threat that may be of greatest concern.

Will such a provision serve as a major deterrent to the UK's open for business tag?

Both France and Germany have a much higher incidence of work related deaths yet have taken a very different approach to the situation.   Germany has no offence of Corporate Manslaughter at all whilst France has a fixed maximum fine for any business convicted of Corporate Manslaughter and a legal system that strictly controls publicity associated with cases.

The French system permits the Court to either impose a fine or order that the Company publicise it’s offence but not both. There are strict controls on the information to be given and the cost the guilty Company have to pay for publicity, if the costs would be greater than those of a fine the French Government will pay the additional costs. To date no such orders have been made in France.  

Why is there so much concern about publicity orders? A few years ago research carried out by the Association of Risk Managers (AIRMIC) revealed that 45% of the risk managers questioned believed that their organisation’s biggest asset was its reputation.  More recently 42% of a group of business leaders when questioned indicated that having to detail the crime to investors, shareholders, suppliers and the general public was the biggest deterrent under the new Act.

Although fines, particularly if very large, might attract a degree of media interest at the time they were imposed, it was felt that these issues could be addressed in the annual report without additional comment.

However, the adverse effects of having to publicise in whatever way the Court thinks fit, i.e. in newspapers, magazines, on radio or television, as the lead item on the businesses website or a combination of any of these, details of the conviction, including what the senior management did wrong, who was killed, what the business is having to do to rectify the situation and what penalty it has received, could have dramatic effects on the ability to do business, particularly in the present economic  climate.  

How will banks in the more risk adverse lending environment that now exists when being asked to provide credit to a business, assess the willingness to do so if its due diligence reveals a publicity order?  What if there is a pending prosecution?  Will the argument that the business is innocent until proven guilty actually carry any weight or will the bank decide to let someone else carry the risk?