Political Pressure on Directors - 14th Dec 2016

This recent post on Kiwiblog looks at the sutuation whereby politicians are demanding directors risk five years jail:

A former union boss (Andrew Little) who campaigned on worker safety, along with Winston Peters, is basically demanding that the Government allow entry into the Pike River mine, instead of sealing it.

Now let's be clear that the only ones who can make the decision about Pike River are the directors of Solid Energy. The Board have had advice that it is unsafe to allow entry, and that it should be sealed.

So what would happen to a Director who because of political pressure said "Let's risk it" and allowed entry - and someone was harmed.

That Director would face a jail term of up to five years imprisonment and/or a fine of up to $600,000 which can not be covered by insurance.

This legal liability can not be waived or avoided. Why? Because of the law brought into place due to the Pike River tragedy. It does not matter who volunteers to go in, and what waivers they offer. If a director is found not to have done due diligence (which ignoring your own official advice and the advice of Worksafe would surely qualify) they will be found guilty of a criminal offence.

So when politicians such as Peters and Little demand Solid Energy allow entry into Pike River, they are demanding the Directors expose themselves to a five year jail term, and a $600,000 fine.

It doesn't matter if you transfer it to another entity. The decision makers in that entity would face the same liability.

Now you could argue that Parliament could pass a special law exempting Solid Energy from the workplace safety law. So then you are arguing that the very site which led to the tougher health and safety laws, should have an exemption from the same laws. That lies somewhere between irony and hypocrisy.

Now again the Government can not order the Directors of Solid Energy to allow access. The Directors can not avoid liability just because a shareholder requests or even instructs them to.  They can not get a waiver and they ca9n not get insurance to cover them.

So as Peters and Little politic to gain advantage from the tragedy that happened at Pike, just remember what they are actually doing - undermining the very law that resulted from Pike River, and effectively bullying directors to expose themselves to criminal liability and five years in jail.
As posted in Kiwiblog 14 Dec 2016

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