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Hazards.org: Beyond prison?

Lord Browne of BP

how bad has it to get before a top boss is jailed?

Some of Britain’s biggest companies have seriously neglected their safety responsibilities, with deadly consequences. Hazards editor Rory O’Neill asks how bad it has to get before a top boss ends up behind bars.

Recent tragedies have called into question whether fines, however large, have a significant deterrent effect on major UK corporations. To date, no executive of any major UK-based company has ever served time for workplace safety offences. A handful of firms have received seven figure fines – including BP, Network Rail and steel giant Corus – but have then gone on to commit serious and in some instances more deadly safety crimes.

BP didn’t learn

A damning sequence of reports in the last 12 months have implicated BP’s London-based global board in cost- and corner-cutting which contributed to the 2005 Texas City explosion, that killed 15 and injured 180 (Hazards 92). The latest, in January 2007, said the malaise went beyond Texas City, with the company’s senior management failing to learn the lessons of early incidents like the 2000 Grangemouth explosion.

The 2003 HSE report into the Grangemouth blast had concluded a series of management failures were responsible for life-threatening accidents at the Scottish refinery complex. The report found standards had been allowed to slip and management had failed to abide by the law. At group level – as high as it gets – BP “did not detect and intervene early enough on deteriorating performance”, the report said. BP was prosecuted and fined more than £1m in January 2002.

In January 2007, the highly critical Baker Panel Report into the BP Texas city blast said its recommendations “contain elements designed to ensure that measures taken will sustain improvement in process safety performance. The Panel believes this emphasis on sustainability is particularly important given BP’s failure to fully and comprehensively implement across BP’s US refineries the lessons from previous serious accidents, including the process incidents that occurred at BP’s facility in Grangemouth, Scotland in 2000.”

The Panel found the same emphasis on short-term cost cuts was apparent in both cases. “This observation finds a parallel in BP’s own lessons from the Grangemouth incidents in 2000,” the report said. It cited a BP mobilised taskforce after Grangemouth that concluded health and safety “was unofficially sacrificed to cost reductions, and cost pressures inhibited staff from asking the right questions; eventually staff stopped asking.” The Baker report comments: “It appears to the Panel that this problem also applied to the US refineries.”

BP was not alone

Steel giant Corus was fined £1.3m in December 2006 for criminal safety breaches which led to the death of three workers in a November 2001 explosion at its Port Talbot steelworks, with the total fine and costs bill topping £3m. This was not the only recent incident on Corus sites. A second explosion ripped through part of the Port Talbot plant in October 2006 and put four workers in hospital with burns. This incident came five months after Kevin Downey, 49, was killed after falling into molten waste at the plant.

The death toll on the company’s facilities is now at least nine in the last six years. Sub-contractor employee Ross Beddow, 20, the most recent casualty, killed in January 2007 after become trapped under a sheet of metal at the company’s factory at Wombourne.

Network Rail is facing an unlimited fine after admitting health and safety breaches relating to the 1999 Ladbroke Grove rail crash. The company, which inherited liability from the now defunct Railtrack, pleaded guilty in November 2006 to charges under the Health and Safety at Work Act 1974. Thirty-one people died and over 400 were injured when a Thames Trains turbo passed a red signal and hit a London-bound Great Western express on 5 October 1999. It is due to be sentenced at Blackfriars Crown Court on 5 March 2007.

The penalty is expected to exceed the £3.5m fine it received in October 2005 for the part played by Railtrack – now Network Rail – in the October 2000 Hatfield rail smash, in which four people died and 102 were injured. Network Rail has had its own post-Railtrack problems. It was fined £130,000 in November 2006 after pleading guilty to safety charges related to the death of lookout Ian Gilmour, who was hit by a train near Edinburgh in April 2005.

Blame the board

Even where the blame has been tracked clearly all the way back to boardroom, the executives making the decisions haven’t been prosecuted. The BP-commissioned Baker Panel Report, produced by an expert group chaired by former US Secretary of State James Baker, savaged BP and identified a “corporate blindspot” on safety that went right up to the London-based global board, headed by chief executive Lord Browne (Hazards 91).

Lord Browne’s reputation was shredded by the Baker Panel report. It said: “BP executive management apparently believed they were appropriately addressing process safety issues and risks, and it took the tragedy of Texas City to wake BP up to the fact that it was not adequately measuring, tracking, and managing process safety performance.” If Lord Browne had shown as much leadership on safety as he had done climate change and alternative fuels then it would “likely have resulted in a higher level of process safety performance in BP’s US refineries,” the panel argued.

“Until BP’s management, from the group chief executive down through refinery superintendents, consistently articulates a clear message on process safety, it will be difficult to persuade the refining workforce that BP is truly committed on a long-term basis to process safety excellence,” said the report.

Words and deeds

Lord Browne told reporters the Texas City blast “was a watershed” that would “forever change BP.” However BP already had a higher number of fatalities than the other major US refineries prior to the tragedy. Two workers had died at the plant just six months before the Texas City blast (Hazards 96). And another explosion, this time with no injuries, occurred at the same plant less than six months later, in August 2005.

Another report, from the Chemical Safety and Hazards Investigation Board (CSB) and published in October 2006, accused BP of a “cheque book mentality” towards safety. Texas City made profits for the company of nearly $1bn (£500m) annually. Yet BP ordered local managers to slash costs.

CSB chair Carolyn Merritt said in January 2007 there was an “iron-clad case” for pinning some of the responsibility on budget cuts. CSB’s follow up report, due on 20 March, will argue that there was a “causal relationship” between reductions in maintenance budgets and the explosion. “We have an iron-clad case for the impact of cost-cutting on safety. We will be making those conclusions in our report,” said Merritt.

CSB says that maintenance spending at Texas City fell by 41 per cent between 1992 and 1998, when the facility was controlled by Amoco. Between 1992 and 2000 the fall was even greater, at 84 per cent. At the time, BP internal reports stated that funding was too low but spending was not increased, the CSB will argue, although BP boosted spending after the accident in 2005.

Greg Coleman, who was the UK-based global vice president of BP’s health, safety and environmental programmes before he left the company in 2006, said in internal BP interviews dated 21 June 2006 that Lord Browne “showed little interest” in safety and demonstrated “no passion, no curiosity, no interest” in safety issues. Mr Coleman is still featured on the UK Health and Safety Executive’s website, among case histories to “demonstrate the vital role that director leadership has to play in ensuring that risks to health and safety are properly managed.”

The Baker Panel Report indicated clearly that the buck stopped with BP’s London-based global board. The report notes: “Under BP’s Management Framework, the Board delegates accountability for all of BP’s operations to the Group Chief Executive, John Browne, who is based in London. In his interview with the Panel, Browne acknowledged his accountability for all aspects of BP’s operations, including safety. Browne in turn delegates responsibility for managing BP’s operations to the respective segment chief executives.”

Lord Browne signs off the company’s global safety policy.

Recent reports suggest BP’s London based board, right up to chief executive Lord John Browne, had a “corporate blindspot” on health and safety and had made budget cuts which contributed to workplace deaths.

The Baker Panel Report concluded that the Texas City blast which killed 15 could have been prevented if the company had learned the lesson of the Grangemouth disaster. It made an explicit criticism of the leadership provided by Lord Browne and the UK-based global board.

It said: “In hindsight, the Panel believes that if Browne had demonstrated comparable leadership on and commitment to process safety, that leadership and commitment would likely have resulted in a higher level of process safety performance in BP’s US refineries. As observed in the 2003 Conference Board report on best practices in corporate safety and health, ‘[i]f the top executive believes in the worth of the strategies, sets expectations for other managers, follows through on those expectations, and commits appropriate resources, shared beliefs, norms, and practices will evolve.’”

But while HSE is quite willing to promote BP’s global safety structure as an example of good corporate behaviour – in February 2007 BP was still featured as a case history of good director “leadership” on the HSE’s corporate responsibility webpages – it is less inclined to accept any responsibility for the fatal shortcomings in the approach of that same board identified by the US reports.

Kevin Allars, head of HSE’s chemical industries division, told Hazards on 30 January 2007: “HSE will be considering the contents of the report and its implications for its regulation of BP and indeed the wider major hazard industry – and developing our intervention approach accordingly.”

Asked about the adequacy of BP’s response to Grangemouth, he said: “We are well aware that effective corporate oversight is an essential element of an effective control and management of risks. We have had ongoing discussions with BP since the Texas City incident to consider the company’s response to the issues, recommendations and learning points that have emerged from various investigation strands. We will continue to seek any necessary improvements we believe necessary in respect of BP’s corporate oversight.”

The answer implies BP failed adequately to improve safety procedures after its Grangemouth prosecution, a failing implicated in the Texas City blast. Had HSE shown as much enthusiasm for investigating the efficacy of BP’s response to Grangemouth and pressing the company to introduce necessary improvements as it has for providing the multinational with free – and apparently, unjustified – promotion, it is arguable the problems that led to Texas City might have been addressed and the tragedy avoided.”

* BP “director leadership” case history on HSE’s corporate responsibility webpages [pdf] 

Make them pay

In the aftermath of the BP panel report, a major UK shareholders’ group called for BP directors to have their bonuses linked closer with the company’s safety and environmental performance. The Local Authority Pension Fund Forum called on BP chair Peter Sutherland to address the issue of how senior executives’ pay is related to non-financial issues.

Corporate governance body Pirc, which has been advising the local authority pension funds, said: “Health and safety and environmental criteria should have a more prominent role in the executive remuneration performance indicators of energy companies.” BP commented that annual bonuses for executives were already linked to health and safety and environmental issues. The company added that Texas City and other problems in the US were partially responsible for Lord Browne’s 2005 annual bonus being cut to £1.75m, from £2.28m for the year before – although his overall pay package increased by almost £700,000 (Hazards 94).

Corus and Network Rail too have both faced accusations of management culpability.

Prison not payouts

After the Corus £1.3m fine, where Justice Lloyd-Jones criticised the company’s “casual” attitude to safety, HSE director for Wales, Terry Rose said: “This was systematic corporate management failure at the Port Talbot works. Proper management attention may have broken the chain which led to the explosion.” Several deaths and another explosion followed. Relatives of the three men killed in the 2001 explosion – Len Radford, 53, Stephen Galsworthy, 25, and Andrew Hutin, 20 – walked out of the court in disgust when the penalty was announced. Mike Hutin, the father of Andrew and a member of Families Against Corporate Killers (Fack), said he was “absolutely gutted”.

After Network Rail pleaded guilty last year to safety charges relating to Thames Trains deaths, Keith Norman, general secretary of train drivers’ union ASLEF, said: “It is appalling that this company, regardless of the title on its note paper, can admit its guilt and its managers and decision-makers can stroll off without a care in the world.” TSSA assistant general secretary Manuel Cortes said: “Most people will find it unbelievable that a company can plead guilty for creating the risk that led to the Ladbroke Grove rail crash and yet in the same breath, try to absolve itself from its responsibility for the death and injuries that their actions created”. He added “how many people do company bosses need to kill before they get a custodial sentence?”

There appears to be a clear discrepancy between penalties for criminal misconduct which contributes to workplace fatalities, and the treatment by the courts of other relatively trivial and certainly not dangerous offences. The same day Corus received its £1.3m fine, three Indian immigrants who used false National Insurance cards to obtain work on the Corus site in Scunthorpe, received four month jail terms. The trio, who have all been served with deportation notices, were sentenced by District Judge Daniel Curtis, sitting at North Lincolnshire Magistrates’ Court.

On the railways, Stanstead Express ticket seller Derek Bartley was jailed for two years in January this year for selling fake tickets.

http://www.hazards.org/deadlybusiness/beyondprison.htm

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