Corporate watchdog sues miner over coal fraud claims

Queensland coal company TerraCom is being sued by the corporate watchdog for breaching whistleblower protections in a case relating to allegations that it was involved in falsification of coal quality testing results.

The Australian Securities and Investments Commission (ASIC) has commenced civil penalty proceedings against TerraCom Limited and some of its senior executives, including ex-chair Wal King, formerly chief executive of Leighton Holdings, along with managing director Daniel McCarthy, chief commercial officer Nathan Boom, and former director and deputy chair Craig Ransley.

Wal King, former Leighton Holdings chief and TerraCom chair, is among TerraCom executives facing civil proceedings launched by the corporate watchdog.

Rob Homer

The whistleblower claimed coal testing labs altered data regarding shipments of coal from TerraCom to suggest they had a higher calorific content and were therefore cleaner and more valuable.

In November last year, independent MP Andrew Wilkie said he had been provided with thousands of pages of documents suggesting that such falsification extended across large parts of the Australian thermal coal export industry, and called for a parliamentary inquiry.

“The fraud is environmental vandalism and makes all the talk of net-zero emissions by 2050 a fiction,” Wilkie told parliament at the time.

“It could also be criminal, trashing corporate reputations as well as our national reputation.”

According to the whistleblower and the documents, coal testing laboratories that certify the quality of coal shipments leaving Australia have been falsifying data to suggest the coal is of higher quality than their tests show.

The falsified data shows the coal to be drier than it is. Since drier coal burns more cleanly, less of it is needed to be burnt for electricity. It creates fewer emissions per kilowatt produced so can be sold for higher prices.

Wilkie welcomed ASIC’s announcement on Wednesday, but said a parliamentary inquiry was still needed to ascertain the extent of possible illegal behaviour.

He said he believed both sides of parliament considered the coal export industry as too big to fail.

“I think there is a mindset in Canberra that they have to run a protection racket for the coal industry,” he said.

In a statement to the ASX, TerraCom confirmed the ASIC action, saying the proceedings related to disclosures made by the company regarding a former employee in 2020, and that the company would vigorously fight the allegations.

ASIC deputy chair Sarah Court said, “This is a significant case because it is the first time ASIC has taken action for alleged breaches of the whistleblower provisions.”

“ASIC alleges that TerraCom and its senior company employees engaged in conduct that harmed a whistleblower who revealed the alleged falsification of coal quality certificates.”

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