When Government Ignores the Rule of Law: NuCoal’s Fight for fair treatment

When the government and those in power ignore the rule of law, innocent parties suffer.

The rule of law is a concept that both the government and citizens know the law and obey it.  It includes principles to ensure just laws rule citizens equally and fairly such as:

These principles are easily threatened and eroded when the government and those in power bypass normal laws and normal procedures and exceed their jurisdiction without any transparency or accountability.

Case Study: Nucoal and the attack on their property rights by the NSW Government

Chris Merritt and Sally Layson of the Rule of Law Education Centre interviewed Gordan Galt, chairman of NuCoal Resources to highlight the importance of the rule of law in protecting property rights.

“A state government can take away your assets and pay you nothing- simply by passing a law” – Galt

NuCoal is an Australian mining company whose”vast majority of ownership is owned by mums and dads who invested in it [via their superannuation funds] for their future.”

In 2009, NuCoal acquired Doyles Creek Mining for $94million. In 2013, an ICAC investigation into the issuing of the original exploration licence to Doyles Creek (NOT Nucoal) found 5 people had acted corruptly. In response to the ICAC investigation the NSW State Government passed a new law that cancelled Nucoal’s exploration licence, took away their compensation rights and indemnified the state against the corrupt actions of its officers and ministers. For more information go to: https://nucoal.com.au/justice/

In this interview, Gordon Galt explains how the government has breached the rule of law and caused innocent parties to suffer.

 

The below quotations are from Gordon Galt during our interview.

NuCoal: The Punishment of an Innocent Party

 

Though ICAC’s investigations found evidence of former NSW minister Ian Macdonald engaging in misconduct by improperly issuing DCM’s exploration licence 14 months before the takeover, NuCoal itself and its shareholders were deemed by ICAC and the NSW Supreme Court as “innocent parties” and were “never accused of wrongdoing”. 

Despite this, NuCoal’s major asset, the exploration license EL7270, was expropriated by the enactment of the Mining Amendment (ICAC Operations Jasper and Acacia) Act by the NSW Parliament without compensation. In doing so, NuCoal’s shareholders suffered a loss of $250-400 million dollars despite being an innocent party acting fully within the law.

“A state government can take away your assets and pay you nothing- simply by passing a law”

Government Rule of Law Fail #1: Bypassing Normal Laws and Procedures

All people should be ruled by just laws                                                                                     – Rule of Law Principle

Had this been left to the normal laws and normal procedures set down in the Mining Act “they would have expunged the tenement and given compensation.”

Under the normal laws and normal procedures, the Mining Act contains procedures if the Government has a concern about the way an exploration licence was operated and provides a course of action to deal with the concern.  In particular, there is a precedent to address the compensation that should be paid which has been applied in recent years by the NSW Liberal Government.

Instead, following ICAC suggestions, the State government bypassed the normal laws and procedures and introduced an unjust law that took away Nucoal’s assets without any consideration or compensation.

The original Mining Act “gave certain rights to the company if you thought there was something wrong. There was a process in there [the Act] that you go through and it would go through objective determination in a Court room. But to circumvent that, they actually passed a specific new law that took away compensation rights, cancelled the lease and even indemnified the State against the corrupt actions of its officers and ministers.”

Government Rule of Law Fail #2: No Due Process or Proper Scrutiny of New Laws

Laws must be made in an open and transparent way by the people as it gives members of society the right to participate in the creation of laws that regulate their behaviour and govern their actions.

– Rule of Law Principles

Scrutiny of laws for compatibility with rights and principles is an essential role of those in Parliament. To enable scrutiny, the legislative process includes three readings and consideration of the bills in both houses of Parliament.

 

“You’ll recall the one-punch law was passed (January 2014) and Parliament was specifically recalled for one day to pass that legislation. While they were there, Barry O’Farrell stuck this other act under their nose and said ‘vote on this too’.”

Gordon Galt wrote in the Australian newspaper on 24 July 2015 “we say that ICAC’s December 2013 report encouraged a negative perception about NuCoal that ICAC did nothing to dispel. In turn the report misled parliamentarians, who were given only hours to consider the Mining Amendment Act before being called on to vote for its passage.   This is especially disturbing given that the Mining Amendment Act denied both the option of paying NuCoal any compensation for the cancellation and denied NuCoal the right to seek such compensation via the courts.”

“As further support, when the draft legislation was published ICAC made no public statements to ensure the parliament knew that it had made no findings of corrupt conduct against NuCoal, that ICAC had recommended NuCoal should be compensated and that the denial of access to legal process was not one of its recommendations.”

With the Parliament focused on passing the NSW one-punch laws, inadequate scrutiny was given to ensuring the Mining Amendment Act was a just law in accordance with the rule of law and that it adequately protected the rights of all parties.

“No one read our submission at all. It would be rather strange to think that the legislation wasn’t actually being drafted while our submission was being written. That’s an inescapable conclusion because it wasn’t an act that was very straightforward. It had all these aspects in it. I’m sure it went through various parts of the government like the Attorney-General, etc, to determine whether they could in fact make it stick.”

“But they then recalled Parliament, stuck this (the Amendment Act) under their nose, did all of the readings in the Lower House and the Upper House all on the same day and within two or three days it was law.”

Government Rule of Law Fail #3: Lack of Scrutiny of Executive (ICAC)

Checks and balances and the separation of powers  are an essential component to prevent the abuse of power and foster accountability for any power exercised.

– Rule of Law Principles

As outlined in our explainer ‘What is the role of ICAC?’, ICAC is a powerful body that wields immense power to weed out corruption through its investigative and education roles.

“These extraordinary powers need extraordinary controls. That’s the way a system should be set up. ASIC needs to report to someone, the ACCC, the Crime Commission, all of these people need to have people above them with rules, principled people who look at them on a continuous basis and make sure they don’t exceed their own boundaries.”

 

Chris Merritt at the Presumption of Guilt Conference said in regard to Nucoal: “Parliament trampled into territory that is properly best left to the courts, instead of waiting for a conclusive finding by the courts on whether there had been an act of corruption by Macdonald and Maitland and whether the three directors of Doyles Creek Mining had engaged in any conduct that breached the law. They were persuaded to impose a penalty.
This is Parliament imposing a penalty on a third party on a factual basis that is now at odds with the findings of the courts.”

 

Moving Forward

Recently, “there was a report handed down by the ICAC oversight committee that was a report into whether or not there should be certain exoneration protocols put into the ICAC procedures. That report specifically said in there that the government should urgently address the issue of compensation for NuCoal so now that was a multi-partisan unanimous report.”
“So, it’s got the support of the Liberal Party, the National Party, The Labor Party… all of those parties have agreed that that should occur and at present, there is absolutely no way that everyone in government does not know what the current situation is.”
“The Premier of NSW needs to take a principled view and move down a principled path” and these principles need to be grounded in the rule of law.