The NSW government’s expropriation of US-owned assets worth $131 million threatens to complicate Australia’s efforts to be exempted from threatened tariffs on imports of steel and aluminium.
The expropriation by NSW was raised by the Americans during last month’s talks in Washington between Trade Minister Steve Ciobo and US Trade Representative Robert Lighthizer.
One of those familiar with the 30-minute meeting said a variety of matters was discussed but the expropriation by NSW was “front and centre”.
This comes soon after three-way talks on the affair involving officials from the Department of Foreign Affairs and Trade, the NSW government and US government officials.
The incident at the heart of US concerns took place in 2014 when the government of former NSW premier Barry O’Farrell used special legislation to cancel a coal exploration licence owned by NuCoal Resources.
NuCoal’s US shareholders have complained to their government that the expropriation breaches a free trade treaty that guarantees US assets will not be taken by Australia unless this is done with due process of law and is followed by prompt and adequate compensation.
The O’Farrell government cancelled NuCoal’s licence using special legislation that banned legal challenges, prevents the payment of compensation and was based on accusations of wrongdoing by others, not NuCoal.
Those accusations featured in a 2013 report on the results of an inquiry into the way the former NSW Labor government had allocated coal exploration licences.
The NSW Independent Commission Against Corruption, which conducted that inquiry, known as Operation Acacia, had urged the O’Farrell government to cancel the licences and compensate innocent parties.
By rejecting the call for compensation, the O’Farrell government — with Labor’s support — imposed losses on the company’s shareholders that have been estimated by NuCoal chairman Gordon Galt to be worth $437m.
NuCoal shareholder Peter Harvey, who lost $110,000 due to the expropriation, complained last month to NSW Attorney-General Mark Speakman about the impact of the decision on his disabled daughter.
Eliza Harvey, 18, has Angelman’s syndrome, an extremely rare genetic disorder that leaves people with developmental delays, intellectual disabilities and limited mobility.
Until now, Eliza’s story has not formed part of the debate about the NuCoal expropriation but Mr Harvey has reluctantly agreed to have her story told in public.
“I have kept my story out of the media for as long as possible. If we could have won the battle without it, I would have preferred to have kept it under wraps. But we have got to the point now where it needs to be told,” he said.
In a letter to Mr Speakman, he said his Newcastle-based family had been treated unjustly.
“My family had purchased the shares as an investment to eventually build a group home for my severely disabled daughter to ensure she was not a burden to the state of NSW upon my wife and I passing,” Mr Harvey wrote. “Your government has effectively eliminated that opportunity for Eliza and her three siblings to have independence.
“I am not a criminal. I am certainly not a big fish but I am an honest family man trying to future-proof my daughter’s quality of life.
“To suggest, infer or legislate that no compensation will be offered to NuCoal shareholders is outright discriminatory, unfair, grossly unjust and politically flawed and you need to address it.
“I implore you to think about all the innocent mum-and-dad investors that have had their money stolen by the actions of the O’Farrell government,.’’
The family of another NuCoal shareholder, Darrell Lantry, lost $600,000 because of the expropriation.
Mr Lantry said he was still annoyed that Mr O’Farrell had played down the potential losses for innocent shareholders by describing investing in listed companies as similar to gambling.
The expropriation placed the Lantry family in financial difficulties. It left them with an investment loan that was secured by their home, and holdings in a mining company that were practically worthless.
“This is like someone coming in to your house and stealing everything,” he said.
When the company’s share price collapsed, he said he had to explain to friends that it was not due to any mismanagement but was entirely due to the actions of the state government.
Mr Harvey, however, believes the blame should be shared between Mr O’Farrell and ICAC.
NuCoal was not a party to ICAC’s inquiry and no accusations of wrongdoing were made against the company.
It acquired its coal exploration licence — its main asset — 14 months after it had been issued when it bought the original licence-holder, Doyles Creek Mining.
As part of that transaction, two Doyles Creek directors, Mike Chester and Andrew Poole, joined the NuCoal board and later stepped down.
ICAC’s Acacia report made corruption findings against Mr Chester and Mr Poole over their involvement with Doyles Creek Mining before it was bought by NuCoal.
The merits of those findings cannot be tested in court. However, neither man was ever charged with any offence.
Subsequent disclosures have made it clear that the Acacia inquiry was not conducted at arm’s length from the O’Farrell government. ICAC’s report to parliament also failed to mention that it held secret evidence from former premier Nathan Rees that contradicted his public evidence that was used in the report.
Chris Merritt
Legal Affairs Editor
(WTF) Used with permission