No money for Pike River families - receiver

By Hayden Donnell, Laura Mills of the Greymouth Star

Bernie Monk outside Greymouth courthouse today. Photo / Greymouth Star
Bernie Monk outside Greymouth courthouse today. Photo / Greymouth Star

Pike River Coal does not have the cash to pay compensation to the families of the men who died in its mine because company bosses have already spent the money on their legal fees, a receiver says.

Greymouth District Court judge Jane Farish today ordered PRC to pay $110,000 in reparation to each of the grieving families and two survivors of the West Coast mine explosion - a total of $3.41m.

She also fined the company a total of $760,000 over nine charges.

Receiver John Fisk said it was impossible for PRC to comply with that order.

Only $156,000 - or about $5380 per family - of its $2 million liability insurance cover was still available for compensation payments, he said.

The other $1.84 million had been used by company staff and directors for their legal fees, Mr Fisk said.

"There's a cold hard sort of commercial and legal reality as to what we're dealing with here as receivers and then the tragic situation of the death of 29 men in a workplace accident. That does come into stark contrast in these situations."

Mr Fisk did not know what Judge Farish meant when she said there was the "means" for reparation payments to be made.

"I'm not sure what she means by that because it can't come from the company so I'm at a loss to know where she thought that could be paid from.

"Unfortunately they won't be able to get anything out of the company."

Pike River Coal was valued at $400 million before the mine explosion on November 19, 2010.

It has about $500,000 in cash and assets remaining, but it is legally bound to pay that money to its largest secured creditor New Zealand Oil & Gas (NZOG).

Families spokesman Bernie Monk said today it was "morally wrong'' that secured creditors were paid first.

Although the families had received financial support, that help had been divided among 55 different families.

"The impact statements show they (Pike) didn't care two hoots about staff."

Mr Monk said he had written to Pike's former Indian directors, but they had "not had the guts to write back".

He said the directors were not fit to run the company.

"It's laughable to hear NZ Oil and Gas made so many millions last year. It's not the end of it."

Judge Farish indicated NZOG was in a position to pay reparation. She also mentioned former directors' private insurance policies.

Last August, NZ Oil and Gas posted a full-year profit of $19.9m.

"Good on the judge," Engineering, Printing and Manufacturing Union assistant national secretary Ged O'Connell said immediately after sentencing.

"Pike River Coal's directors should not be able to hide behind shabby legal structures and carry on as if nothing ever happened. It's time we had corporate manslaughter laws and personal liability for directors so they can be held accountable for their actions.''

Receivers were appointed in mid-December 2010 - just two weeks after the mine exploded, claiming 29 lives.

Pike River Coal had invested $290m in the mine operation. The Bank of New Zealand was a first ranking secured creditor, owed about $23.2m. In 2011, the receivers said they would give full payouts to the 243 unsecured creditors owed up to $10,000 each.

Grey District Mayor Tony Kokshoorn said self-regulation of health and safety lit the fuse of the disaster, fuelled by the company's "greed and complacency".

West Coast-based Green Party MP Kevin Hague said it was "a travesty of justice" that the families could end up with as little as $5000 each.

He said Pike River's $2m liability insurance cover was "totally inadequate" for a high-risk operation and the families had been left with "crumbs" after everyone else had been paid.

The crippled mine was last year sold to Solid Energy for $7.5m.

Mr Fisk said today it received $80m in an insurance claim, which was partly used to pay unsecured creditors. The rest was used to repay secured debenture holders in order of priority.

There was money in the bank account when the receivers were called in, mainly advances from NZOG. Some was used to stabilise the mine, and the tunnel reclamation plan.

The $7.5m from Solid Energy was also used to pay secured creditors.

When the board put itself into receivership, it said in a statement: "The only prudent action we could take was to approach our major creditors and advise them we were unlikely to be able to repay our loans at the end of the standstill period that NZOG and BNZ offered us after the 19th of November.''

Former Pike River chairman John Dow was not answering the phone at his Nelson home this morning, or his cellphone.

- APNZ

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