Government will not pay for Pike River lawyers

The New Zealand government says it will not be funding the participation of receivers in the Royal Commission of Inquiry into the tragedy that killed 29 men.

Stacey Shortall, lawyer for the company told the three-hour preliminary hearing into the disaster that it could not pay the legal costs and has requested legal aid similar to that used by the families of the victims.

John Fisk from PricewaterhouseCoopers, the receivers of the mine, said they have written to Attorney-General Chris Finlayson requesting government assistance because its limited funds is being used to pay unsecured creditors and cannot provide witness briefs, compilations of documents and other requirements for the inquiry.

But New Zealand Prime Minister John Key has slammed claims the company cannot afford to pay for its own legal representation.

“From our analysis they had $10.9 million before they went into receivership, they’ve spent $5 or $6 million so they’ve got $4 to $5 million left, so if they want to fund representation, they can,” he told reporters.

“It’s not an adversarial court, it’s an inquiry process, and our view is that the company has the resources to actually pay its own legal bills if it wants to.”

He went on to say he was doubtful the government would change its mind on the decision not to fund the receivers’ legal costs.

“That’s our view at this time and its not likely to change.

“We’ve funded legal representation for the 29 families, we’ve funded legal assistance for the contractors and employees of Pike River but our view is that the company itself and the receivers have resources.”

Damian O’Connor from the New Zealand labour party asked the Prime Minister in Parliament if the government could be satisfied with the outcome of the inquiry if the company does not participate fully, but Key responded that “the company doesn’t need lawyers to fully participate.”

“It’s our view that the company has enough resources to pay for its own legal representation,” he said.
Leader of New Zealand labour agreed with Key.

We have to know the answers and the Pike River company has to front up and the receivers, but they should be paying for that themselves.

"Too often we’re finding the taxpayer is saddled with the cost that should be met by the private sector.
“They capitalise on their profits but they like to socialise their responsibilities and their costs.

“That’s not good enough."

Grey District Mayor Tony Kokshoorn agreed with the Prime Minister, telling NZPA he was disappointed with the company’s stance, following the hearing.

"I felt that they should have been transparent and open and available to actually give all the evidence that was required,” he said

The Commission of Inquiry is scheduled to officially begin with public hearings on May 23, and run over 15 weeks.

The commission would have ht power to obtain relevant documents or compel witnesses to give evidence if necessary.

The biggest shareholder in Pike River Coal has today also refused to provide cash for the mining company’s receivers legal costs for the Royal Commission of Inquiry.

New Zealand Oil & Gas (NZOG) has 29 per cent of shares in the embattled company, worth $72 million.
The company wants to see some of that money it gave Pike in secured and unsecured loans when the sale is finalised.

The successful bidder is likely to be announced by the end of June and the sale may include the rights to the mining company’s legal claim, which could be up to $100 million.

Corporate affairs manager for NZOG, Chris Roberts said there was no reason Pike’s 6000 shareholders should contribute to the legal costs of the officers and director’s of the company, but as an unsecured creditor, supports the receiver providing the inquiry what assistance they are able to.”

The receiver still has about $7m left from the $12m NZOG put into the company following the mine explosion.

The $12m is included in the $72m total owed to NZOG.

"We never anticipated getting any of that [$12m] cash back. We presumed most of it will be used through the receivership process," Roberts said.

NZOG want a return from the sale of the mine for both secured and unsecured creditors and possibly even shareholders, who are currently at the end of the line.

Image: Science Media Centre
 

To keep up to date with Australian Mining, subscribe to our free email newsletters delivered straight to your inbox. Click here.