Things go wrong in organisations.  Doctors make mistakes, traders take foolish risks.  Drugs are marketed that have adverse side effects.  Oil wells spill, and emissions levels are falsified.  When these things come to light, what happens?   What is the nature, and level, of individual and corporate responsibility, and the nature and level or civil, or criminal, liability?  The problem is serious.  Public confidence in banks and in pharmaceutical companies has disappeared.  Medical negligence claims spiral.  The VW scandal is doubly serious because VW is such a widely admired company.

Anyone observing these areas of law and regulation in recent years will be somewhat confused.  Banks have paid out eye watering sums in fines and penalties.  ‘Rogue trader’ Kweku Adoboli, who lost UBS £1.45bn, was jailed for seven years, but Bruno Iksil, the ‘London Whale’ whose activities cost JP Morgan Chase $6.2bn, is not to face charges.  The phone hacking enquiry has mostly ended in acquittals.  The dismal Mid Staffs hospital trust, now dissolved, was fined for breaking health and safety regulations, and the Tunbridge Wells trust is being prosecuted for corporate manslaughter following the death of one of its patients in a botched Caesarean operation.  The UK Treasury has announced a watering down of the senior managers’ requirement (?) for financial services, while US Deputy Attorney General Sally Yates has set out a new policy on corporate wrongdoing which will target responsible individuals rather than the firms themselves.

We are always inclined to ask ‘who was to blame?’ and victims of events understandably if often unjustifiably want someone to be punished for their misfortunes.  But the public interest is to prevent bad things happening.  Sensible policies identify that as the primary goal.  The key to these sensible policies is to begin from the proposition that covering up malfeasance in organisations is often a more serious crime than committing it.   Concealment diminishes both personal and corporate responsibility, and gets in the way of learning lessons which will prevent similar events occurring in future.  The increasingly widespread attempt by senior managers to distance themselves from the actions of their subordinates corrodes honest organisational culture.

The most interesting, thoughtful and perhaps successful attempt to deal with these issues is the ‘just culture’ of the modern aviation industry.  Just culture begins from the recognition that mistakes happen, and that organisations advance by learning from mistakes.  Its core principle is that individuals should acknowledge, and will not be penalised for, and honest (but not reckless) mistake consistent with their level of skill and experience.

Yet the concept of just culture does not sit particularly well with the traditions of the criminal law – in which retribution for the harm someone’s action has caused plays an unavoidable role:  or even more with the traditions of the civil law – in which the attribution of blame is key to obtaining compensation for loss.   Honest mistakes are often negligent – I should not have made that incision, or placed that trade without further investigation;  I should have signalled before turning left.  Honest negligence is a long way short of recklessness – we are all of us negligent every day, when we cross the road without looking or forget to buy the milk on the way home.

Perhaps the future lies in moving away from a concept of blame.  Responsibility – corporate or personal – might be strict:  did the even happen, not who caused it:  but whether that responsibility carries a penalty might depend on the distinction between honest and reckless error, not that between the negligent and the unfortunate.  The issue is not easily resolved, but the decline of public trust in corporations today threaten the legitimacy of global corporate activity.