Australia's corporate cop has laid criminal charges against a beleaguered Indian-owned Australian coal mine already facing a revolt from workers and a legal fight with its biggest customer.
Key points:The corporate regulator has charged Griffin Coal with offences over alleged failure to report financesCharges come as the coal miner faces legal battles with its biggest customer and workforceGriffin is indirectly responsible for producing a significant share of power to the WA's main grid
Griffin Coal, which is believed to be more than a billion dollars in the red, has been hit with charges from the Australian Securities and Investments Commission (ASIC) over an alleged failure to lodge its audited financial accounts.
An ASIC spokesman, while confirming the matter was before the courts, declined to reveal more details about the prosecution.
But it is understood the corporate watchdog acted after Griffin failed to post updated financial statements dating back to 2018.
The latest charges prompted a state MP to declare the miner, based near Collie in Western Australia's only coal-producing region, was "in its death throes".
Miner in laundry list of woes
Last month, Griffin lost a major court battle with its former mine manager, Carna Group, and was ordered to pay more than $5 million in damages.
In a further blow, the judge presiding over the case this week ordered Griffin to pay almost $1.5 million extra in interest and costs on top of the damages claim.
At the same time, Griffin is facing a damaging legal row with its biggest customer, the Japanese-owned Bluewaters power station, over claims the miner has failed to adequately maintain the generator's coal stockpile.
Amid the courtroom drama, Griffin has also been hit by a series of rolling stoppages from workers claiming they are fed up with the company's performance.
South West Liberal MLC Steve Thomas said the charges by ASIC suggested Griffin was "well past the crisis stage".
Losses '$1 billion and counting'
Dr Thomas said that since being taken over by Indian interests in 2011, Griffin had suffered "significantly" more than $1 billion in losses and there was no end in sight to the financial bleeding.
"This is a serious charge and it's not something that ASIC would not have considered deeply," Dr Thomas said.
"It's just another indication of the dire financial position in which this company finds itself.
"This is an indication of a company in its death throes and unfortunately the South West is going to have to deal with that."
WA Energy Minister Bill Johnston said it would be inappropriate to comment on the ASIC charges but he "looked forward to the justice process being completed".
Dan Butler, a dispute resolution and litigation partner at law firm Jackson McDonald, declined to be drawn on the specifics of the Griffin charges.
Lack of accounts a 'red flag'
However, Mr Butler said charges relating to alleged failures to report financial accounts were serious and not taken lightly by ASIC.
He said the corporate cop had been more actively cracking down on alleged failures by companies to comply with reporting requirements under the Corporations Act.
"In theory at least, some of these offences have maximum imprisonment penalties of up to 15 years," Mr Butler said.
"People can go to jail.
"It's critical to the functioning of the system that these things are kept up-to-date, they're reviewed independently and that everybody can trust the numbers."
According to Mr Butler, while it was not always the case, a company's failure to update its accounts was often a red flag for its financial health.
He said creditors such as suppliers and customers invariably relied on accurate information to assess the viability of another company and an absence of this meant they were effectively flying blind.
"It can be an indicator of insolvency in the moment," he said.
"And looking at it retrospectively, if a company does in fact become insolvent and go into liquidation, the failure to keep financial records can give rise to a presumption of insolvency … such that directors could potentially be liable for insolvent trading for the period in which they've failed to keep those records appropriately."
Greg Busson, the state secretary of the Construction, Forestry, Maritime, Mining and Energy Union's mining division, said workers had been downing tools for an hour a day since late last month amid "frustration" with the company's handling of the workforce.
Striking mine workers 'fed up'
Mr Busson said employees were "fed up" after their enterprise deal with the company expired last year and little progress had been made on hammering out a new one.
He said workers were unwilling to accept pay freezes any longer after agreeing to cuts averaging $37,000 several years ago and receiving next to no increases since.
"The action is in response to frustration from workers who've put their faith in the company and the company wasn't prepared to give them a wage increase," Mr Busson said.
"They've been more than reasonable … they've stuck with the company through thick and thin and their sacrifices were worth more than the company was willing to put in."
Mr Busson also said the fact ASIC was pressing criminal charges against Griffin was "worrying" and he questioned whether the company would have the capacity to pay any further penalties.
Griffin was contacted for comment.
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Posted 11 Nov 202111 Nov 2021Thu 11 Nov 2021 at 10:38pmShareCopy linkFacebookTwitterArticle share optionsShare this onFacebookTwitterLinkedInSend this byEmailMessengerCopy linkWhatsApp