Insurance and Jobs - by Michael S.

Updated: May 7

The posts about MBIE and employment settlements make concerning reading.

It seems it is common for an employment settlement to be used to cover up wrongdoing. Given the way MBIE operates its confidentiality systems, if the employer prefers to keep on a person who has committed a fraud, they can do that and get rid of the person who reported it instead. They can even say the person who reported the fraud actually committed it.

If MBIE signs the record of settlement, everything will can be completely confidential. The employer can not only blame the fraud on the employee who reported it but they can also make an insurance claim for whatever was stolen.

Managers can run large frauds using records of settlement, as we know, and get "confidentiality".

Insurance companies are usually very astute to refuse to pay out if they can find a good reason. They are not allowed by law to compensate for fraud they cannot pay for illegal contracts such as contracts to conceal evidence, such as the ones MBIE supports.

Illegality is not the same as criminality. A contract can be illegal even if it is not a contract to commit a criminal offence. But concealing evidence is a criminal offence. It is just that, under Chief Judge Colgan, MBIE became able to authorise concealing evidence of crimes - and then concealing the evidence of that. That's why it makes records of settlements so "confidential" and suppresses names and documents. It is not possible to get away with fraud without doing that.

So in employment law in New Zealand, illegal behaviour by employers can be covered up completely if it is signed up by MBIE. With a record of settlement in place, an employer can blame the fraud on the person who reported it, dismiss them, make them sign a record of settlement and also make an insurance claim for the stolen money.

We might think that New Zealand employers would not do this, but of course we would never be likely to know.

An insurance example that does not involve a record of settlement but does involve MBIE is the case of Peter Whittall. In this well known case, a company director was prosecuted for health and safety offences but bought himself out of prosecution using insurance money.

Peter Whittall was one of the directors of Pike River Coal Ltd in Greymouth. The company was convicted of breaches of health and safety regulations leading to explosions in 2010 which killed 29 men. The other directors were not questioned at all so it seems sensible to assume that MBIE signed records of settlement that those directors made with Pike River Coal Ltd.

Peter Whittall was the recent Chief Executive Office. He was the only director questioned or charged. The Pike River Coal Ltd company was convicted, but the company's Receivers, through their lawyers Minter Ellison, had already transferred all its assets to Solid Energy Ltd so it had nothing to give the families of the 29 dead men.

Peter Whittall was being prosecuted when his QC, Stuart Grieve, got the proceedings moved from Greymoth to Wellington. He agreed a payout with the Crown Solicitor, Brent Stanaway, who was acting for MBIE and the government. Peter Whittall's solicitor Stacy Shortall, from Minter Ellison, denied it was her idea.

They agreed that Peter Whittall would provide 80% of his Director's Liability Insurance for the families and MBIE would drop the prosecution.

This seems to have been how MBIE paid off the families for its safety inspection failures. It also seems sensible to assume that most or all of the other 20% of the Director's Liability Insurance went to Peter Whittall's lawyers, as Minter Ellison and QCs are very expensive.

There is now a problem. A few years later, the Supreme Court later declared the buy-off to be illegal. Peter Whittall was supposed to come back to stand trial in New Zealand.

His first problem must be that he probably hasn't got any insurance left. So he would have to pay for his own lawyers.

Also if he was found guilty, the original insurance money would have to be given back. Since it appears to have been used by MBIE, it appears that in fact MBIE would have to give it back out of government money, unless they could get it back from the 29 miners' families.

If the lawyers Minter Ellison and Stuart Grieve QC took money for fixing up the illegal deal, they would have to give it back, because what they did has been declared illegal. So would Brent Stanaway.

In the light of that, it is not very surprising either that lots of documents turned out to have disappeared, or that the Minister did not bring Peter Whittall back to stand trial after all.

That Minister had been the general secretary of the Engineering Union when the mine exploded. He might have found it very difficult if Peter Whittall, who become the Chief Executive Officer of Pike River Coal Ltd just a few weeks before the explosions, started talking about what really happened before, during and just after the explosions.

And what if Peter Whittall spilled the beans and then someone brought up all the smaller coverup deals that employment lawyers fix up and MBIE signs off - how many of those 11,000 a year are coverups of fraud? It appears that it is a substantial percentage, with some very big ones like the Tauranga City Council affair, and this is the New Zealand government carrying it out.

Accountants, auditors, police and SFO all accept coverups because that's how it's done in New Zealand. But insurance companies are international. They might start thinking they don't accept it and don't want to pay out for it.

There could be a big can of worms here about how the New Zealand government and courts deal with insurance companies.

For example, we know that Helen Cull, who ran several government inquiries and is now a High Court Judge, organised a coverup for her close friend Gordon Stewart and his own manager Tony Smith when they had been faking documents. Tony Smith shows up later drafting legislation to change the law first so there could be a coverup for Helen Cull - who was, incidentally, a former director of Solid Energy Ltd, which received the assets of Pike River Coal Ltd - and then so that MBIE could take proceedings for contempt against people who didn't obey them. All these people, and Peter Whittall, are still in place and nobody appears to feel they have done anything wrong.

If even a percentage of deals are run by lawyers and politicians for each other as closely as that, this is something that could really damage the reputation of New Zealand.

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