By Andrew Bushe
DUBLIN – If companies do not sort out the problems of computers with the Year 2000 bug and a disaster results, the directors could face charges of corporate manslaughter through gross negligence, a Dublin conference was told.
Chris Gooding of the multi-national law firm LeBoeuf, Lamb, Greene and McR’, also warned that Year 2000 failure could result in compensation law suits involving exposure to millions of pounds in damages.
The Year 2000 bug results from older computers that treat the year as two digits and will not be able to deal with the arrival of the new millennium.
Gooding said that over the last few years there had been an increase in the number of offenses for which a director or officer of a company may find themselves personally liable for.
“The Year 2000 problem is a matter of which directors or officers will now be deemed to be aware of,” he told the Irish Management Institute conference.
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“If, despite the public awareness of the issue, a director or officer fails to take steps, first to identify whether there is a problem and, secondly, if there is a problem, to take steps to implement a solution, then this will leave him open to claims for both breach of his fiduciary duty too act in the best interests of the company and breach of his duty of skill and care.”
He referred to a new offense of “corporate killing,” which could apply to disasters and result in unlimited fines for companies found guilty.
“It needs little imagination to conceive a “Piper Alpha” type disaster brought about by Year 2000-induced safety systems failure.
“Litigation is inevitable and companies should establish a paper trail which can be used in future litigation,” Gooding said.
The conference was told that a selection of insurance policies to cover Year 2000 disaster situations were being launched.
Most companies had tended to focus on the technical problems of the bug but failed to look at the wider risk management dimension.