The corporate regulator’s court loss against TerraCom and its former directors has raised serious questions about Australia’s commitment to tackling systemic fraud in the coal export industry. Stephanie Tran reports.
Earlier this month, the Federal Court dismissed the Australian Securities and Investments Commission’s (ASIC) case against current managing director Daniel McCarthy and former officers Nathan Boom, Wallace King and Craig Ransley.
ASIC accused the coal miner of misleading the market by failing to correct false laboratory test results that inflated the quality of its coal exports. Justice Jackman found that ASIC failed to prove that TerraCom had engaged in misleading or deceptive conduct under the Corporations Act.
In his judgment, Jackman was critical of the evidence presented, and concluded that ASIC had not shown that the company or its directors knew the coal quality certificates were falsified or that they deliberately misled the market.
Independent MP Andrew Wilkie, who raised allegations of widespread coal testing fraud in Parliament in 2022, said the ruling could have far-reaching implications.
“I think there is a real risk now that the export coal industry, the labs and the federal government will use the outcome of the court case as a reason to say the matter has been addressed, and that’s the end of the matter,” Wilkie told Michael West Media. “The risk is this gives the government top cover for continuing their protection racket of the export coal industry.”
But Anglo, Glencore, Peabody and MacBank?
Wilkie has long maintained that TerraCom is not an isolated case. In documents tabled in federal Parliament, he accused several major coal exporters including Anglo American, Glencore, Peabody and Macquarie Bank of participating in similar fraudulent conduct involving the falsification of coal quality certificates.
These documents alleged a pattern of collusion between mining companies and testing laboratories to doctor results in order to secure higher prices from overseas buyers.
Despite the serious nature of these allegations, Wilkie said successive governments have failed to act.
“Ultimately, the responsibility for this scandal rests with the federal government. The Morrison government was aware of the allegations and decided to not act. Then the Albanese government, in its first term, was made aware of the allegations by me in parliament and my discussions personally with the resources minister and decided not to act,” he said.
In response to the court ruling, an ASIC spokesperson said the regulator is “carefully considering the judgment and has until 1 August to lodge an appeal, should it choose to do so.”
The agency declined to comment on whether it would pursue investigations or enforcement action against the other companies named in Wilkie’s parliamentary disclosures.
Wilkie highlighted the importance of the federal government stepping in, saying the TerraCom ruling made it even more critical to ensure the coal industry is properly held to account.
“Regulatory agencies like ASIC should not give up. But now, in the aftermath of this court case, it’s even more important for the federal government to intervene,” he said.
Coal giants home free, ASIC buries TerraCom fake tests scandal
Stephanie is a journalist and has a law/journalism degree. She was a finalist for the 2021 Walkley Student Journalist of the Year Award and the winner of the 2021 Democracy's Watchdogs Award for Student Investigative Reporting.