STEFAN GOLAB WAS OVERCOME by vapors escaping from cyanide vats at work. Now he is dead. And company executives may soon be in jail.
The three executives of Film Recovery Systems Inc. (FRS) were found guilty in June of murdering Golab, because they "knowingly created a strong probability of death." The landmark case could lead to more criminal prosecutions of small-business executives. Similar charges were pressed in September against officers at a concern operating in Detroit.
In most instances of corporate wrongdoing, the company itself takes the rap, which is typically a slap on the wrist. E. F. Hutton & Co., for instance, paid a $2-million fine for its guilty plea on 2,000 counts in a huge checkkiting scheme. Pressing criminal charges against executives is rare, because it is tough to prove their knowledge of illegal acts in huge, decentralized organization.
But the case against FRS succeeded because the short chain of command in the small company (1982 reported sales: $13 million) allowed prosecutors to trace blame to the top. "The executives of big companies aren't as threatened by this verdict as the top managers of small companies," says Christopher Stone, a law professor at the University of Southern California.
Like many small companies, FRS operated out of tight quarters and had a hands-on hierarchy. Top managers worked closely with plant employees, but ignored their complaints. The founders had industry experience, and knew all the hazards posed by 140 vats of bubbling cyanide. In Detroit, executives are charged with involuntary manslaughter of a worker who died from carbon monoxide poisoning. They allegedly knew that the company's van was defective.
Many small companies with similar operating structures -- close quarters, hands-on management, and owners who know the production processes in detail -- may now be vulnerable in cases of corporate crime. More cases could be on the way. "There are plenty of prosecutors thinking about it," says Jay Magnuson, who helped prosecute FRS.