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Pike River: the $3.41 million question

Explosive documents shed light on the failure to prosecute anyone over the Pike River Mine disaster.

Getty Images/Listener Illustration


Eight weeks before the prosecution case against former Pike River Coal chief executive Peter Whittall was controversially dropped, Whittall’s lawyer wrote to the Ministry of Business, Innovation and Employment (MBIE) offering a deal: withdraw the charges and $3.41 million would be paid to the families of the 29 men killed in the mine and the two miners who narrowly escaped death.

The letter, written by Stuart Grieve QC on October 16, 2013, suggested the agreement could be wrapped up and payment made by the third anniversary of the disaster on November 19.

Although both the Whittall camp and the MBIE have vehemently denied that the $3.41 million payment to the Pike victims in December was “blood money”, the Grieve letter makes clear that the offer was contingent on the ministry dropping the 12 charges filed against Whittall under the Health and Safety in Employment Act.

Read more: What really happened at Pike River?

The letter, released this week to the Listener under the Official Information Act, proposed that:

• the ministry not proceed with the charges against Whittall by advising the court that no evidence would be offered in support of any charges;

• a private meeting be arranged at which Whittall would “express sympathy” on behalf of the company to the families and survivors and convey his “personal empathy and condolences”;

• each of the company’s directors at the time of the explosion be asked to attend the meeting; and

• any public statement by the MBIE and/or the Crown about the withdrawal of the charges be made in terms agreed with Grieve.

Grieve’s letter foretold a long and costly legal battle if the MBIE pressed ahead with the prosecution and indicated the former Department of Labour’s inspectorate, which had become part of the ministry, would be the butt of potentially uncomfortable evidence.

“Putting to one side our view that Mr Whittall has good defences to the charges, which would in part involve a considerable focus on the role of the Department of Labour’s inspectorate in relation to the mine, there are obvious significant economic benefits and preservation of resources benefits in concluding this matter as expeditiously as possible.”

Grieve alleged multiple failings in the way the ministry had handled evidence against Whittall, who was the general manager of the mine project from early 2005 and became chief executive a few weeks before the November 2010 explosion.

For instance, “by copying documents to its servers, opening such documents and then copying them to an external hard drive for disclosure to the defence, the ministry has altered the underlying metadata of at least 23% of the full disclosure … the authenticity of at least those documents cannot presently be established beyond a reasonable doubt”, he wrote.

He also alleged thousands of Pike documents had not been opened by the MBIE and that not all of the data that should have been obtained from company hard drives, laptops and cellphones had been.

On two occasions, the letter referred to the likelihood of high pre-trial costs because Whittall’s defence team would require “extensive re-disclosure” and pre-trial applications to determine the admissibility of evidence. “By withdrawing the charges, not only will all these costs and burdens be avoided, but the extensive judicial and prosecution resources required for a defended hearing of up to 16-20 weeks in length could instead be utilised elsewhere.”

He said the “voluntary payment” of $3.41 million was “economically viable only if Mr Whittall’s continuing preparation costs can be terminated promptly. If this cannot be achieved, the proposed payment will not represent any saving over the cost of proceeding to trial and in that event, whatever the outcome, I believe that the families will not receive anything like the amount offered.”

Stuart Grieve QC (above) offered the MBIE a deal for dropping the charges against Peter Whittall. Photo/Jane Ussher

THE WHITTALL CASE IS DROPPED


As it turned out, the ministry did not make the final decision to drop the charges against Whittall until December 4, slightly later than the timing Grieve proposed.

Preceded by a blanket suppression order that barred the media from publicising even the fact that there was to be a hearing involving Whittall, Judge Jane Farish agreed in the Christchurch Court on December 12 to the MBIE’s request to discharge the case against Whittall. The MBIE entered no evidence on the charges. Drawing on insurance money that would not now be spent on defending the charges, Whittall and some of the company’s former directors undertook to pay the $3.41 million to the victims.

In a letter to the Listener accompanying the release of the Grieve letter, Brett Murray the general manager, high hazards and specialist services, for WorkSafe New Zealand [the new health and safety agency launched in December 2013], said: “MBIE did not then and does not now agree with the content of the [Grieve] letter and nor does WorkSafe NZ now. It is nothing other than a statement of position by the defence. It has no legal status.” Murray said neither the MBIE nor WorkSafe accepted the position put forward by Grieve that the withdrawal of charges was a precondition of the offer, and Grieve’s allegations about the handling of the investigation and discovery process were rejected.

Murray reiterated the MBIE’s stance that the offer of $3.41 million – the sum of compensation that Pike River Coal Ltd was ordered to pay by the court last year, but could not because it was broke – was “a part, but only a part” of the decision to drop the case against Whittall.

The abandoned charges – laid by the former Department of Labour in November 2011 – alleged that Pike River Coal failed to take all practicable steps to ensure the safety of workers in respect of methane explosion management, ventilation management, panel geology and mitigating the risk of explosion and that Whittall, as an officer of the company, acquiesced or participated in those failures. A further four charges relating to the same mining risks alleged that Pike failed in relation to contractors and that Whittall acquiesced or participated in that failure. The remaining four charges alleged that in respect of the same four risks, Whittall as an employee of Pike failed to take all practicable steps to ensure that no action or inaction of his while at work harmed any other person.

The charges did not attempt to establish a causative link between the alleged failures and the fact that the mine blew up, killing 29 – only that there had been a breach of the legal duty to take the necessary steps to control the hazards.

Other documents released by the MBIE to the Listener under the Official Information Act show the ministry was well advanced in reviewing its case against Whittall within a month of receiving Grieve’s offer of a deal. By November 15, it had received advice from Christchurch Crown Solicitor Brent Stanaway, who assessed the case in line with the Solicitor-General’s Prosecution Guidelines.

Geoffrey Podger, acting chief executive of WorkSafe, which has inherited the Pike file, told the Listener Stanaway advised that “whilst the evidential test might be considered to be just met, the chances of success were low and that in his view the public-interest test was not met”.

Advice was also sought from the Solicitor-General as to whether the MBIE could take into account the $3.41 million offer in deciding whether to proceed with the prosecution. Podger, a public servant from the UK contracted to set up WorkSafe, said he understood such an offer was “not precedented in New Zealand”. The advice was that although it was unusual, it was “perfectly proper” to take it into account and that “indeed we should do so”, he said.

DEPARTMENT OF LABOUR UNDER FIRE


Aside from the extraordinary offer of money from the Whittall defence camp, the documents released to the Listener reveal that a senior official in charge of health and safety at the former Department of Labour at the time the mine exploded went on to lead the group of ministry officials that reviewed whether to proceed with the charges against Whittall.

Leslie Haines was acting chief executive, labour group, responsible for the department’s health and safety and employment relations services, when the Pike disaster occurred. She later became deputy chief executive of the labour group, of the MBIE, the mega-ministry set up by Economic Development Minister Steven Joyce in mid-2012, which absorbed the former Department of Labour.

An independent investigation into the roles played by both the former Department of Labour and Crown Minerals in the Pike disaster was completed for the MBIE in March 2013 by senior public servant David Shanks and barrister Jane Meares. The report heavily criticised the former department for its lack of involvement with the front-line inspectorate, lack of health and safety expertise at senior management level and the absence of an “effective means of evaluating risks and making resource decisions in relation to low frequency/high consequence areas”. It noted that as a result of the demands made on Ms Haines, she “had very little time to focus on the operational aspects of health and safety regulation”.

There was a “lack of appetite for effective and proactive enforcement” at the “very top level”, the investigators said. At times the organisation’s “overriding concern appeared to be the protection of its own reputation”.

However, the investigators concluded that no departmental employees had acted negligently, carelessly or contrary to policy, and that the issues were “systemic” and therefore no employment action should be taken against any of them.

The newly released documents show that in her then-capacity as the MBIE’s deputy chief executive, health and safety group, Haines was among the group of officials involved in deciding whether to proceed with the Whittall prosecution. Podger told the Listener that Haines chaired the review group, in which he was also involved, until she retired on December 1. He then took over her role and was in charge when the final decision was made, on December 4, to ask the court to discharge Whittall. Podger became acting chief executive of the newly formed WorkSafe when it was launched later that month.

When asked about Haines’s participation in the review, Podger said, “The decision [to drop the charges] was not taken while Leslie was with us … The decision was clearly made by me, on the advice of this group.” He defended Haines’s involvement with the review. “The decision reflected external advice. If a decision had been taken that was widely at variance with the external advice that the group got, then no doubt people might start an argument as to … whether we were biased. But the fact of the matter is that the group under Leslie’s chairmanship got the legal advice that it got,” he told the Listener.

Peter Whittall. Photo/Greg Bowker

PROSECUTION GUIDELINES CHANGE


The Solicitor-General’s Prosecution Guidelines were revised as a result a major review of the public prosecution service in 2011. They introduced for the first time the statement that cost is a “relevant factor” when making an assessment of whether a prosecution is in the public interest.

The guidelines require prosecutors to assess their case against both the evidential test (whether there is credible evidence upon which a jury or judge could be reasonably expected to be satisfied of guilt) and the public-interest test (which includes the severity of the alleged offence, whether the defendant was in a position of authority or trust and the offence is an abuse of that trust, and the size of the likely penalty).

WorkSafe has refused to release Stanaway’s review of the prosecution case against the guidelines on the grounds that it is legally privileged, so it remains unclear how the various factors – including the offer of money – were weighed up. But the court memorandum filed by the MBIE said one of the reasons the public-interest test was not met was that the charges against Whittall were relatively minor, carrying a maximum fine per charge of $250,000 and with no possibility of a prison sentence.

The MBIE has emphasised that the unavailability of key witnesses, the likelihood that there would be a contest between experts over technical evidence and procedural pre-trial issues were key factors in the decision to ditch the charges.

However, the Listener recently obtained a copy of the Department of Labour’s exhaustive 283-page investigation report, which formed the basis of the charges against Whittall, as well as against Pike River Coal (which was fined a record $760,000 last year and ordered to pay the $3.41 million compensation) and the Australian drilling contractor at the mine, Valley Longwall International (which pleaded guilty and was fined $46,800).

The report (one section of which has been redacted) was the outcome of 12 months’ investigation involving detailed scrutiny of internal Pike documents and mine monitoring systems, and interviews with managers, workers and contractors. Much of the amassed evidence has been exposed to cross-examination at the Royal Commission on the Pike River Coal Mine Tragedy and it heavily influenced the commission’s final report.

PIKE FAILURES REVEALED


The investigation reveals in substantial detail the failure to take all practicable steps to keep employees and contractors safe at the mine, as required under the Health and Safety in Employment Act. Public disclosure of the document raises further serious questions as to why no one has been held to account for those failures, which include:

• the company’s directors never exercised their “explicitly delegated” power to audit the company’s health and safety systems;

• the company deferred the collection of key data, including adequate measurements of the gas content of the coal and its potential for explosive outburst. It pushed on with the development of the mine without this information;

• it allowed a drill rig to operate underground without gas sensors;

• it failed to construct stoppings – the physical barriers in the mine used to control the flow of fresh and contaminated air and to mitigate the impact of explosion – to a recognised standard;

• it failed to investigate instances of potentially explosive methane accumulations;

• vehicle maintenance was inadequate; several vehicles inspected after the explosion were found to have faulty explosion protection;

• the main ventilation fan was installed underground without explosion protection;

• no emergency evacuation drill had been conducted for 13 months; drills should have been held every three to six months;

• the mine manager (Doug White, at the time of the explosion) did not know about repeated spikes of methane in the mine;

• the company failed to measure catastrophic near-misses, such as accumulations of explosive concentrations of methane, and incidents such as overheating machines that could cause methane at explosive concentrations to ignite; it focused instead on the incidents of minor slips, trips and lost-time incidents;

• some diesel mine vehicles were not fitted with systems to shut down the machines when methane levels rose; there was also no system to ensure the drivers of those vehicles carried personal gas detectors;

• only one gas sensor was measuring the quality of contaminated air in the weeks before the explosion and it was near the top of the ventilation shaft where the atmosphere was significantly more diluted than in the working area of the mine;

• the company enlarged the zone that was being mined without properly investigating the geological stability of the area; and

• stone dusting – the application of limestone over areas of exposed coal to suppress the risk of a coal-dust explosion – was irregular.

“PASSIVE” ATTITUDE TO SAFETY


The report also reveals that the company had data showing that the coal in the area that was being mined using the hydro-monitor – a machine that used high-pressure water to cut coal from the face – was very gassy. The area had a gas content of 6-7 cubic metres per tonne of coal and at an adjacent borehole gas was assessed at 8.3 cubic metres per tonne. Such figures would meet the definition of a highly gassy mine, but the company described the coal as having only low to moderate gas levels.

The board of directors is criticised as “passive” in its attitude to health and safety. Although former chairman John Dow said health and safety were “top of mind” and “number one item on the board agenda”, this was not the case. “Apart from the 15 November 2010 meeting [four days before the explosion], there was very little recorded in the minutes of inquiries by the directors on health and safety matters,” the report says.

The report also gives a detailed account of the last movements of the men underground on the day of the explosion, including workers’ efforts to control methane emitting from an in-seam borehole that had been accidentally intersected by a mining machine. It discloses that a pair of contractors were working in an area at risk of methane accumulation without personal gas detectors and using a vehicle that was not fitted with any device to shut it down automatically in the event of high gas.

The report also notes that gas sensors on the Valley Longwall drill rig (which probed with long horizontal drill rods into the coal seam) had been covered over during the night before the explosion while the crew tried in vain to recover a stuck drill rod. It reveals that some workers underground found out only by chance that a round of explosives was to be detonated in an area being worked by contractor McConnell Dowell in the early afternoon of November 19.

The investigation report concludes that Pike River Coal had a “lack of mindfulness of the potential for a catastrophic explosion … Evidence gathered showed the company gave little precedence to the collection, collation and transfer of information about incidents when the risks were not well controlled and failed to develop systems to ensure that information on those incidents got to the people who had the authority to follow it up effectively. For instance, the mine manager was unaware that methane in excess of 1.25% was regularly going through the return of the mine …

“Every methane accumulation was an opportunity for Pike River Coal to learn to manage the risk better. Pike River Coal failed to learn from those opportunities.”

Read more: What really happened at Pike River?

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