Menu

EFIC fail: Adani support creates legal & political risks

Open cut coal mine. Photo RenewEconomy

David Barnden

new report by Environmental Justice Australia finds that if Australia’s export credit agency, EFIC, funds Adani’s controversial Carmichael coal mine, it would expose its directors to significant legal and political risk.

The  Export Finance and Insurance Corporation (EFIC) has regularly met Adani  and reportedly decided to provide  concessional  support to a company in Adani’s supply chain.

EFIC told Senate Estimates on June 1 that the relevant transaction was not proceeding ‘at the moment’.

However,  neither EFIC nor the federal Trade Minister, Steven  Ciobo, have ruled out supporting Adani or its associates for the Carmichael project.

EFIC was in the news again last week when it was revealed that Minister Ciobo last year overturned a ban on government-backed loans to domestic mining operations without consulting his department.

EJA’s new analysis finds EFIC support  for  the Carmichael project would likely breach e EFIC board’s  duties and be beyond the Trade Minister’s powers.

The beneficiaries of EFIC support are exposed to the significant risk of legal challenge and changing political whims.

Trade Minister Ciobo has the power to direct EFIC to support Adani’s project via the National Interest Account for unlimited taxpayer support. But such a direction must not be unreasonable. The project must  be commercially viable, in the national interest and in the public interest.

EFIC’s board is subject to stricter obligations than the directors of Australian companies. Legislation requires them to act ethically and as well as with care and diligence.

The analysis finds that financial and environmental considerations surrounding Adani’s massive Carmichael thermal coal mine would likely persuade a court that neither EFIC’s board nor the Trade Minister would be acting within the law, if material support was provided by EFIC.  Such decisions are open to legal challenge.

Then there is the political reality that the federal  opposition has ruled out public  financial  support for Adani. Any direction by Minister  Ciobo  should be quickly overturned by a future  Labor  finance minister, who would be bound  to honour  the party’s promise of no taxpayer money for Adani.

Australia’s Constitution empowers the parliament of the day to cancel EFIC contracts and prevent payouts of guarantees and insurance.

EJA’s analysis also reveals EFIC has failed to provide the public its board’s assessment of the Adani-related project it has already  assessed, in apparent contravention of section 9 of the Export Finance and Insurance Corporation Act.

The board’s assessment must be made public irrespective of whether the project is proceeding. Disclosure of the assessment is the first step for the public to keep EFIC’s Board accountable for decisions to support  onshore resource and related infrastructure projects.

Minister  Ciobo  defied the Productivity Commission’s finding that EFIC support was not justified for those projects and changed EFIC’s Statement of Expectations in September 2017.

There are many inherent risks to EFIC providing financial support to Adani. They materialise now for all transactions and are real and significant.

Bankers – and Adani’s business associates – should be aware of the substantial legal and

political risks as significant community opposition to Adani’s coal project continues to grow.

David Barnden is a senior lawyer at Environmental Justice Australia. This article was first published by RenewEconomy.

 


One response to “EFIC fail: Adani support creates legal & political risks”

  1. Bruce McQueen says:

    Yet another deplorable act by a rogue minister in Turnbull’s rogue government. Perhaps Ciobo should explain to the Australian taxpayer how funding a foreign-owned climate killer is in the national interest.

Leave a Reply

Your email address will not be published. Required fields are marked *

 

Become a supporter of The Echo

A note from the editorial team

Some of The Echo’s editorial team: journalists Paul Bibby and Aslan Shand, editor Hans Lovejoy, photographer Jeff Dawson and Mandy Nolan

The Echo has never underestimated the intelligence and passion of its readers. In a world of corporate banality and predictability, The Echo has worked hard for more than 30 years to help keep Byron and the north coast unique with quality local journalism and creative ideas. We think this area needs more voices, reasoned analysis and ideas than just those provided by News Corp, lifestyle mags, Facebook groups and corporate newsletters.

The Echo is one hundred per cent locally owned and one hundred per cent independent. As you have probably gathered from what is happening in the media industry, it is not cheap to produce a weekly newspaper and a daily online news service of any quality.

We have always relied entirely on advertising to fund our operations, but often loyal readers who value our local, independent journalism have asked how they could help ensure our survival.

Any support you can provide to The Echo will make an enormous difference. You can make a one-off contribution or a monthly one. With your help, we can continue to support a better informed local community and a healthier democracy for another 30 years.”

Echonetdaily is made possible by the support of all of our advertisers and is brought to you by this week's sponsor  Falls Festival