Corporate Social Responsibility Wiki

From Corporate Social Responsibility Wiki

Should an individual be held accountable for a playing a small part in a larger corporate wrong doing?

[edit] What's "playing a small part"?

Think you have to look at what types of prosecution are out there and how they are applied in practice. Plus who actually gets prosecuted (e.g. manager or director level?)

SUGGEST THE FOCUS HERE IS ON DECISION MAKING POWER. CAN AN AUTONOMOUS DECISION BE MADE? FRAUD WILL GO TO ANYONE - REGARDLESS OF POSITION (Ref: NICK LEESON IN ‘95). PERSONALLY I WOULD BE SURPRISED IF PROSECUTORS PLACE ANY IMPORTANCE ON THE FACT THAT SOMEONE WAS A "MANAGER" - IT IS A POINTLESS TITLE. THE DISTINCTION AT LEAST FROM A GOVERNANCE PERSPECTIVE IN CAPITAL MARKETS IS DIRECTORS AND THEN EVERYONE ELSE WITH THE ADDED BONUS THAT DIRECTORS ARE ACCOUNTABLE FOR EVERYONE’S ACTIONS - WHETHER THEY'RE AWARE OF THE ACTION OR NOT.

THE COUNTERARGUMENT THAT ANY PART IN WRONG-DOING SHOULD BE PUNISHED IS PRETTY EASY BUT I THINK THE KEY HERE IS KNOWLEDGE. ANY PARTICIPATION IN WRONGDOING WARRANTS PUNISHMENT. WHETHER THE PERSON KNEW THAT WHAT THEY WERE DOING WAS WRONG IS ANOTHER MATTER (THE TYPISTS AT ENRON WERE NEVER GOING TO PROSECUTED FOR WRITING THE DOCUMENTS THAT BROUGHT THE COMPANY DOWN).

[edit] Examples of prosecution of company individuals:

FSA (HAS THE FSA EVER PROSECUTED SOMEONE FOR PLAYING A BIT PART IN SOMETHING … I WOULD HAVE THOUGHT THEY’D GONE AFTER PEOPLE WHO’D MADE A DECISION … AGREE THAT THEY’VE PROSECUTED INDIVIDUALS JUST NOT SURE THEY THESE PEOPLE HAVE PLAYED A “SMALL PART” IN SOMETHING) Cartels Corporate Manslaughter Health & Safety Director's duties Environmental?

[edit] How they are applied in practice:

E.g. failed prosecutions & lessens learnt Herald of Free Enterprise 87 Southall Rail disaster 97 Leading to 2007 Corporate Manslaughter act.

Or Leniency policies among prosecutors - how / why prosecuting authorities cut deals with individuals and companies - Is this actually demonstrating that individuals are NOT held accountable for the greater win of attacking the company?

(ISN'T THE DEAL TO ASSIST IN PROSECUTION - IT IS EASIER TO GET AN INDIVIDUAL RATHER THAN A COMPANY?)

[edit] Arguments in favour of the motion would be:

What's management for? (MANAGEMENT ARE NOT THE SAME LEVEL AS DIRECTORS)? Playing a small part is trumped by the responsibility of management (DOESN’T EVERYONE HAVE A FIDUCIARY DUTY TO THE COMPANY?) of the company. (BEAR IN MIND TO PROSECUTE THE MINIONS YOU FIRST HAVE TO PROVE A CASE FROM THE TOP DOWN). Some parts are just so small (KEY IS KNOWLEDGE - IF YOU KNOW IT IS WRONG YOU SHOULD BE LIABLE - EMPLOYEES ARE NOW PROTECTED BY PROTECTED DISCLOSURE PROVISIONS IN EMPLOYMENT LAW ... I.E. LEGISLATION HAS REMOVED THE EXCUSE THAT AN EMPLOYEE WAS FEARFUL OF HIS JOB AND AS SUCH FAILED TO DO ANYTHING) that they would not on their own cause the whole problem and that the creation of the problem should be the responsibility of management above this one small player.

Phantom managers: Even if the individual concerned is in management he may not have the true decision making power or influence to make a difference (NEED TO BEAR IN MIND THAT IF THEY KNEW, IRRESPECTIVE OF POSITION, THEY SHOULD HAVE DONE SOMETHING). Therefore punishing him fails to recognise and address the true nature of the problem. He becomes the scapegoat.

What's the law found in terms of prosecutions? It’s historically been easier to go after smaller companies or individuals rather than big corporates [not sure that stacks up but they may not know that!]. (I DON'T BELIEVE THIS IS CORRECT - COST BENEFIT OF GOING AFTER A SMALL COMPANY RENDERS PROSECUTIONS POINTLESS. FROM A DOCUMENTARY POINT OF VIEW IT MAY BE EASIER TO PROVE BECAUSE THERE ARE LESS DOCUMENTS AND A LACK OF CASH RESOURCES MEANS THE TRANSACTIONS ARE NOT AS COMPLICATED BUT PROSECUTORS HAVE FINITE RESOURCES – THEIR OWN LAWYERS AREN'T AS INTELLIGENT AND THEY DON'T HAVE UNLIMITED FUNDS TO PURSUE THINGS. THIS MEANS THEY GO AFTER BIGGER TICKETS). E.g. corporate manslaughter prosecutions in UK pre 2007 changes tended to succeed against smaller businesses where the director was targeted but tended to fail against large companies where it was difficult to find the individual behind the decisions. (WASN’T THIS MORE BECAUSE IT WAS EASIER TO PROVE THE FAILURE OF A DIRECTOR?) Indeed it's a recognition of this fact that has caused the law to shift - the courts now have to look at the "management systems & practices" of the company rather than looking for the scapegoat. (SYSTEMS ARE STILL SET BY THE BOARD THOUGH).

"It's the culture of the company stupid": It is the culture of an organisation which needs to be put on trial, not one individual playing a small part. ONLY if individuals play a large part should they be prosecuted. You are not suggesting that individuals should not escape responsibility, but there needs to be a threshold under which they are not prosecuted. (HOW DO YOU PROSECUTE A CULTURE?)

Rehabilitation, NOT punishment: Are there other ways of disciplining the small part player? If not prosecution then re-education (INSTEAD OF SENDING SOMEONE TO JAIL WE SEND THEM ON AN ETHICS COURSE? ISN’T THIS A LITTLE BIT LIKE AN AMBULANCE AT THE BOTTOM OF THE CLIFF?)? The analogy is how driving offences are treated: you can have points on your licence and risk a ban OR take a driver instruction course to help you become a better driver. This takes the debate from punishment to rehabilitation. AM - I'm not sure about this, rehabilitation still implies accountability, i.e. to get rehabilitated means you needed rehabilitation ... from an accountable act.

I think you end up looking at what is being complained about in these instances and what are we really trying to achieve as a society. Do we want a company to change or do we just want to see someone punished (PUNISHED). Very apt for the current credit crunch and the calls to crucify bankers! (DO YOU HONESTLY THINK ANYONE WILL PUNISH PEOPLE BELOW DIRECTOR LEVEL … EVEN IF AT ALL?)