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A Brief Guide for Companies
Published by Sentencing Council.
- Effective from 1st July 2014.
- Applicable to all adult or corporate offenders sentenced after that date in any court.
- Set out the approach to be taken by courts in sentencing for environmental offences and are intended to result in more consistent sentencing.
- Apply differently to individuals and organisations.
The structure of the guidelines is that they deal specifically with the sentencing of offences under section 33 Environmental Protection Act 1990 and Offences under the Environmental Permitting Regulations 2010. They explain how fines for those offences should be assessed in a twelve stage process which is summarised below:
Firstly consideration must be given to compensation for victims and to confiscation of the proceeds of crime under the Proceeds of Crime Act 2002.
The offence must then be categorised depending on the degree of culpability of the offender and the harm caused or risked. Risk of harm is less serious than actual harm. Category 1 is the most serious and category four the least serious.
The Court will inquire into means and will want comprehensive accounts for the last three years for the offending organisation. It will take into account the means of a linked organisation if it can be properly demonstrated to the Court that the resources of a linked organisation are available to the offender. Particular attention is to be paid to turnover, profit before tax, directors remuneration, loan account and pension provision as well as assets disclosed by the balance sheet. Failure to disclose the accounts will lead to the conclusion that the company can afford to pay any fine.
Each category has a starting point for the level of fine which depends on the size of the organisation in terms of its annual turnover. A large organisation is classed as one with a turnover of £50M or more, medium £10-£50M, small £2-£10M and micro under £2M. An organisation with more than £50M may attract a higher starting point over the scale given.
From there the court must consider further features such as aggravating and mitigating factors. As previously, an offence committed for financial gain and failure to heed warnings (for example) will be aggravating and little or no financial gain and self reporting or remorse (for example) will be mitigating.
There is then an exercise of reviewing whether the sentence as a whole meets the objectives of punishment deterrence and removal of gain derived through the commission of the offence.
The aim is for a combination of compensation confiscation and fines to remove any economic benefit derived from the offending. The aim is to bring home to the management and the shareholders the need to improve regulatory compliance. An assessment should be made of whether the fine is proportionate to the means of the offender and the extent to which it may interfere with future improvements within the organisation. It is expressly said that in bad cases it may be an “acceptable consequence” that the offender goes out of business.
Any reduction for factors such as cooperation with the prosecution and an early guilty plea is then taken in to account.
Consideration will be given to ancillary orders such as remediation, forfeiture of vehicles and deprivation of property.
If more than one offence is being dealt with there will be consideration of whether the total sentence is proportionate to the offending behaviour.
Reasons will be given for the sentence and its effect will be explained.
Other offences are to be dealt with in a similar way adjusting the starting points by reference to the applicable maximum fines. For futher information, please contact Deborah Sharples on 01223 461155 or click here to email Deborah. To learn more about our environmental law team, please click here.