Little money left to pay compensation to miners’ families

Questions have been raised whether the defunct company that ran the Pike River coalmine can pay compensation for the fatal mine blast, with available funds amounting to just $5000 each for survivors and victims’ families.

Judge Jane Farish will sentence Pike River Coal Ltd (in receivership) today in the Greymouth District Court after finding the company guilty in April of nine health and safety breaches, and blaming it for causing the explosion that killed 29 men in November 2010.

The former Labour Department, now part of the Ministry of Business, Innovation and Employment, charged the company over its methane, strata and ventilation management, mitigating explosion risk and impact, plus transgressions on health and safety management for contractors, subcontractors and their employees. Each charge carries a maximum penalty of $250,000, potentially tallying more than $2 million.

Yesterday afternoon, the judge questioned the ministry’s lawyer, Mark Zarifeh, about whether the company in receivership could pay fines and reparations because of its bleak financial position.

It owed about $21m to New Zealand Oil and Gas as a secured creditor and more than $30m to unsecured creditors, she said.

‘‘The problem here is, on the information disclosed to date, there is $156,000 remaining in an insurance claim that could be used for reparation.’’

Dividing that by 31, including the 29 men and two survivors, worked out at $5000 each and was ‘‘just ridiculous’’, she said.

‘‘Considering today on the news someone who lost their foot was afforded $40,000.’’

Zarifeh said reparation between $60,000 and $125,000 for each victim’s family was recommended.

He said minutes from a Pike River Coal directors meeting three weeks before the blast resolved to get statutory liability insurance of $2m.

That amount was ‘‘woefully inadequate’’ for a company of its size, the judge said.

It was unclear whether the insurance policy had been worth $2m or been paid out for other claims, only leaving $156,000, she said. She revealed she had to order the insurance company to give some details about the policy because it had not been forthcoming.

The judge agreed with some sentiments expressed in the victim impact reports that it seemed unjust the company could ‘‘shut up shop’’ and walk away from the mine within a month of the explosion without providing anything for the families of the victims.