Fran O'Sullivan: Forgotten disaster needs share of certainty

Contractors have been treated badly by Pike River management. Photo / Mark Mitchell
Contractors have been treated badly by Pike River management. Photo / Mark Mitchell

I am not a huge fan of John Campbell's baroque television style. It is a bit too much in the hand-wringing camp for my taste.

But hats off to the TV3 host for his relentless reporting of the misery Christchurch folk faced as they hunkered down in their wrecked houses amid putrid muck from liquefaction after yet another major 6.3 earthquake struck Christchurch last week. Campbell did not overdo his usual moral outrage.

The upshot was that Campbell Live's coverage was television reporting at its best.

It elevated the miserable plight facing many Christchurch citizens to national level. And played a major role in forcing the Government to step up the pace and fast-track the announcement of its earthquake package - a factor that even Earthquake Recovery Minister Gerry Brownlee obliquely acknowledged during Thursday's nationwide telecast.

On reflection, the June 13 earthquake has been a blessing in disguise. No lives lost this time. But just sufficient new liquefaction and cliff damage to underline to those living in the red zone why there is no alternative but to move out and on. And sufficient damage to underline to officials why they must keep up the pace so that those in the orange and white zones can also look forward to their futures with some certainty.

The Government's package is exceptionally generous.

Cabinet Ministers would have been well aware that more than one international reinsurer has been contemplating legal action against the Christchurch City Council over why developments took place on land which could obviously be compromised by a significant earthquake.

So, the Government has used its negotiating clout to bring some sense to behind-the-scenes disputes which have been hindering progress.

But it should now also use its weight to ensure that developers do not stiff Cantabrians when they come to buy new sections in areas that would have not have had a huge commercial worth prior to the earthquakes.

But what about Pike River where 29 miners lost their lives in the November 19 explosion?

It is an utter disgrace that struggling West Coast contractors are now having to apply to put the coal mining company into liquidation to try to get payment of the millions of dollars they are owed.

Morning Report's Simon Mercep was on the verge of an apoplectic fit when he challenged contractors' representative Peter Haddock for having the temerity to tell a few home truths this week over the abysmal response to the initial explosion.

"How dare he do this ahead of the royal commission?" was the general tone.

But would Haddock have got any attention for the contractors' legal action if he had not pressed media buttons? I doubt it. Pike River Coal is in receivership. According to its receivers it owes around $119 million including $33 million to unsecured creditors who rank behind Bank of New Zealand, NZ Oil and Gas (Pike River's major shareholder) and Solid Energy.

Haddock's unsecured contractors are owed a mere $5 million for work done in October 2010 and in the fortnight leading up to the November 19 explosion.

According to commercial norms they must wait until the secured creditors are satisfied.

But here's the thing.

Pike River's practice was to pay its contractors invoices on the 20th of the month following the invoiced period. That means on November 20 - one day after the explosion - they should have been paid for their October work.

But only one contractor - Aotea Electrical - received its October payment. Not one other contractor was paid out yet the company's board did not call in the receivers until December 10.

This is outrageous commercial behaviour. It is fair enough for the company to withhold the payment that was due for the November work. In the normal course of events it would not have been made until after the receivership was announced.

I've got a lot of respect for Bank of New Zealand chairman John Waller, a former leading light at PricewaterhouseCoopers who also happen to be Pike River Coal's receivers.

It's worth pointing out that like other Australian-owned trading banks operating in New Zealand, the BNZ has gone out of its way to help its business customers whose operations were severely impacted by the Canterbury earthquakes.

Solid Energy chairman John Palmer is also a decent man.

NZ Oil & Gas chairman John Dow must be given the benefit of the doubt. But as one of two NZOG directors on Pike River's board, surely he bares some moral responsibility for the company's failure to pay the October invoices.

Surely, these three gentleman could have a whip around within their respective organisations to ensure the contractors are paid their due. It was after all their money.

If not, can our generous Government please help out?

I would rather my taxes go to helping these people than a bunch of sailors trying yet again to win an over-hyped America's Cup.

- NZ Herald

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Head of Business for NZME

Fran O'Sullivan has written a weekly column for the Business Herald since its inception in April 1997. In her early journalistic career she was a political journalist in Wellington and subsequently an investigative journalist who broke many major business stories including the first articles that led to the Winebox Inquiry in both NBR and the Sydney Morning Herald. She has specific expertise in relation to China where she has been a frequent visitor since the late 1990s. She is a former Editor of the National Business Review; has twice been awarded Qantas Journalist of the Year and is a multiple winner of the Westpac Financial Journalism Supreme Award.

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