More often than not people are disappointed by the sentences handed out by Courts on OHS breaches. Even with sentencing guidelines, the ultimate decision rests with the judgement of the Court. Today’s $A84,000 fine against Santos Ltd appears low considering that the incident had the potential to be catastrophic and the company has just reported “half-year profit up 155% to $504 million”. (ABC News provides a good pocket description of the incident with The Age discusses the corporate impact at the time)
The 2004 incident involved a near miss but a near miss that was just a second away from a catastrophe. The fact that no one was directly injured has been mentioned in many media reports but not being injured is not the same as not being affected. Industrial Magistrate Ardlie’s decision records that some employees had to run through the gas cloud to reach the muster point. Some had difficulty breathing. One worker was knocked off his feet by the blast and had the fireball travel over him burning the exposed parts of his body.
Dr John Edwards of Flinders University is quoted in Industrial Magistrate Ardlie’s decision that, without prompt evacuation, “the exposure dose [to hydrocarbons] could have been considerable and life-threatening”.
In South Australia, the Moomba gas plant has long been an issue of concern due to the reliance many industries place on the energy supplied by the plant. This report by Fairfax Digital from 2004 provides a snapshot of the disruption from the shutdown.
Ardlie mentions that Santos was later than usual in making a guilty plea and it is useful to remember that Santos pursued legal action, eventually unsuccessfully, in relation to this Moomba incident through to the High Court of Australia .
Ardlie also seems impressed by the corporate mea culpas and specifically mentions the presence in Court of Santos’ Vice President of Project Services as an indication of the company being a “responsible corporate entity”. Ardlie interpreted his presence as “indicative of the extent to which the defendant does take so seriously the health, welfare and safety of its employees.” There could be many reasons for that person’s presence in court including the fact that as he is “responsible for the environment, health and safety across all the defendant’s business operations both here and overseas” his job was likely on the line.
A Santos spokesperson told SafetyAtWorkBlog in response to the penalty:
“Santos accepts the Court’s findings and the penalty handed down today. The fine imposed by the Court is in the range of penalties for offences of this nature. Safety has always been, and continues to be, our highest priority. We work continuously to maintain and improve safety in our workplaces. We recognise the difficulty that this incident caused those involved. The specific issues that occurred in this incident were thoroughly investigated and addressed.”
It is worth remembering the 2001 incident at the same plant which resulted the death of Colin Jeremy Sutton and injuries to two others. The penalty reported for this fatal incident was reported to be $A105,000, very similar to the fine applied today.
Santos’ report to the Department of Primary Industries and Resources summarised the 2001 incident:
“During this reporting period one Serious safety incident occurred at the Moomba Plant. This resulted in fatal injuries to a Santos employee. The incident involved the unintended release of volatile product that subsequently ignited.”
The 2001 Annual Report says, on page 24:
“…a serious incident occurred at Moomba which tragically resulted in the loss of one of Santos’ employees.
The incident involved an unintended release of volatile product that subsequently ignited. Santos has thoroughly investigated the incident and the findings have been presented to Santos employees.
A number of initiatives have been undertaken since the investigation of the incident.
Santos strives for the highest standard of occupational health and safety (OH&S) and is fully committed to a work environment free of injury and illness.”
Stephen Gerlach, Santos’ chair, wrote in the same annual report (page 3):
“Santos’ Board and management continue to strive for the highest standard of occupational health and safety and the lessons learnt from this incident are being applied as part of the Company’s commitment to achieving a work environment free of injury.”
The corporate recording consequence of the 2001 fatality was not that high. The 2002 Annual Report says of one of the company’s “key measures of safety performance”, the total recordable case frequency rate (TRCFR),:
“The Company’s total recordable case frequency rate (the combined rate for Santos employees and contractors) rose slightly to 9.0 in 2002 from 8.8 in 2001. This performance can be attributed to a deterioration in contractor safety performance in 2002, following four years of improvement.”
No mention of the 2001 fatality and the 0.2 increase was identified as due to contractor safety performance.
On 19 August 2011 Santos released its half-year results which state “a 60% improvement [in safety performance] in three years” with a current TRCFR of 2.4. (earlier figures are available at Santos’ website)
TRCFR is supposed to allow for cross-industry benchmarking as, according to one source, it includes
“…the sum of fatal injuries, lost-time injuries, restricted work cases and medical treatment cases”.
Curiously Industrial Magistrate Ardlie was similarly impressed by Santos’
“….clear commitment to the community. It has invested approximately $40 million in community partnerships since 2004. Its focus is in a number of key areas including education, youth, environment, arts, culture, health, community wellbeing and indigenous matters.”
He also noted that
“Since the incident the defendant has undertaken extensive measures to ensure that such an event could not happen in the future. Counsel for the defendant detailed the measures which resulted in expenditure of some $40 million.”
The money spent on plant upgrades is understandable and the community expenditure is likely to be important to the locals but it is possible to ask why the company felt it necessary to spend $A40 million on the community in the wake of the 2004 non-fatal near misses but apparently nothing in the wake of the 2001 fatality.
This multi-million voluntary payment to the community provides a striking contrast to the total penalty imposed by Industrial Magistrate Ardlie:
A fine (after 20% discount) of: $A84,000
Court costs: $A111
Victims of crime levy: $A160
Counsel fee (payable to the Crown): $A1250
Counsel fee (payable to Safe Work SA): $A$21,000
This comparison questions the benefit of court-imposed penalties on a large national corporation that in 2008 admitted,
“At year end 2007 Santos had a market capitalisation of approximately $8 billion…”
Why bother applying a discount of $20,000 to a company with an $A8 billion capitalisation?
The prosecution of Santos over this significant near miss requires more examination to evaluate what the incident has cost Santos in total expenditure so that the community understands the true cost of inadequate safety management. The figures above show just how ineffective OHS penalties can be, as a deterrent, when they are financial penalties on a large corporation.
It is interesting to wonder whether such a penalty would have been applied if another industrial magistrate had heard the case.
After every fatality and near miss, companies usually take, to quote Industrial Magistrate Ardlie:
“…extensive measures to ensure that such an event could not happen in the future”.
But workplace incidents do happen again as Santos knows from the 2001 death of a worker. The details in Ardlie’s decision clearly indicate how close Santos came to having up to 13 fatalities in 2004. The decision needs careful reading but most media will write, if at all, articles based on the media statements of Santos and SafeWorkSA rather than on the magistrate’s decision and, as so, are doing the community a disservice.
The case citation is “Markos v Santos Limited [2011] SAIRC 57“.
I have to agree that the amount of the fine is insignificant when compared against the latest profit numbers of the company. Perhaps the judge took into consideration the amounts that Santos has spent to minimize the risk of occurence.
My greatest concern is the position that this incident is considered a \”near miss\”, I have always been led to believe that a near miss is an incident that had the potential for but did not result in injury or property damage.
The other concern is that the company took the case all the way to the High Court before pleading guilty to the charge. Accepting responsility did not appear to be their original intent.
Wonder if the safety culture and physical environment has improved enough to prevent a future incident of a similar nature?