A just decision, but from where will the money come?
Ross Louthean — 6 July 2013
The emotion shown by Judge Jane Farish in handing down her decision in the Greymouth District Court yesterday reflected the anguish and despair for a need to give fair compensation to the bereaved families of the 29 men who lost their lives at the Pike River mine in late 2010.
TVNZ footage of Judge Farish presenting her decision.
The problem is that it is a Mother Hubbard situation.
The poor safety management of Pike River Coal Ltd that brought misery to 29 families happened at a time when the company was getting on thin ice with funds, so when the methane blast occurred the company was caught short and had borrowings from major shareholder New Zealand Oil & Gas Ltd (NZOG).
The Pike River Royal Commission exposed all the frailties, incompetence and poor management activities, as well as the grossly inadequate government mine safety work and the disastrous process of allowing the police take control of the mine rescue.
The situation today is how will the compensation to families be paid?
For starters Pike River Coal was fined $760,000 and the receiver made it clear that the pockets were far from full ($500,000 in available funds and.$156,000 in “leftover” insurance money) There is also reparation of $3.41 million to the Pike families, representing $110,000 for each victim and the two survivors.
Then unsecured creditors are owed $31 M, with NZOG still owed $20.5 M from loans to the company.
Receiver John Fisk said he could not see how the families could be paid.
“It's an unfortunate situation but that's the commercial reality of it,” he said.
Judge Farish suggested the company's directors and parent company (NZOG) might be expected to come to the party.
It’s a difficult position for NZOG for the company several years ago sponsored the development and listing of Pike River Coal. One of its representatives on the Pike River board left soon after the disaster, whereas chairman John Dow – a well known figure in the Australasian mining and mining education scene – was at the mine and in Greymouth during the unsuccessful rescue attempts.
NZOG forsook some early payments from the receiver to allow financial relief to some of the contractors and suppliers on the West Coast.
Yesterday lawyers for Pike River directors John Dow, Ray Meyer and Stuart Nattrass, said the company did not "walk away" from the families after the explosion, as was indicated in the families' victim impact statements and by Judge Farish in court.
Law firm Minter Ellison Rudd Watts said "good faith efforts were made by Pike River men and women in the wake of the explosion to support the families by providing, among other things, family liaison services, distribution of food and other parcels, and regular updates at meetings.”
The lawyers’ statement also said it did not accept Judge Farish's comments that no funds had been forthcoming from Pike River to help the companies.
“It should be known that Pike River and NZOG contributed very shortly following the explosion a total of $1 M to funds set up for the benefit of the families.
In her emotional delivery of the ruling Judge Farish said “It was clear that there is significant psychological and emotional trauma that is ongoing for the families of the miners who were killed and also those for the two men survived.”
She said the mine is not the final resting place that the families have chosen for their men.
“The victim impact statements were harrowing and they feel great sorrow, and it's only when you read them in full and you have their collective sorrow that one understand the imperative it is for them to be able bury their brothers, husbands, partners and sons.
"To retrieve the bodies may not answer their nightmares. It may not answer all of the questions that they have. But it may go some way to affording them some peace in their lives."
Counsel for the Pike families, Nic Davidson said there would be a bid for compensation from the Government.
It was claimed that funds available from the coal company would see only $5,000 paid each for survivors and victims’ families.
Chief executive of NZOG, Andrew Knight told Radio New Zealand’s checkpoint programme the company has already given a lot of money to Pike River employees, families, the West Coast community and for tunnel recovery work.
Knight said he needs to listen to Judge Farish's ruling to understand from where she drew her conclusions.
Whether the Government, NZOG or other parties come up with funds for the grieving families is an issue that may evolve through political and legal pressure.
But the issue of families being able to retrieve the remains of their loved ones is highly remote, given that Pike River mine is owned by Solid Energy that is in no position to re-enter or redevelop the mine. This may mean it should be rapidly put back on the market to find a new owner whose purchase price in part could compensate the families.
A possible problem is that several suitors two years ago were deterred by anti-foreign investment sentiments expressed in the media, and a likely buyer would probably have to be a foreigner.
Sources: press.co.nz, radionz.co.nz and nzresources.com files
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