Clayton Cosgrove
SOE Spokesperson

22 March 2013

Solid Energy docs prove inquiry needed

Treasury documents prove that the Government is culpable for the problems Solid Energy faces, as they were warned years ago but did nothing apart from demand higher debt and dividends, says Labour’s SOEs spokesperson Clayton Cosgrove.

“National has tried to hide behind a so-called ‘perfect storm’ but it was one of their own making. From the first meeting ministers had when coming into Government they were warned about the volatility in coal prices. But they didn’t heed those warnings.

“These documents show that ministers repeatedly told Solid Energy to increase debt and pay higher dividends. Solid Energy resisted but in the end had to pay dividends by increasing debt, helping lead to its downfall.

“When UBS, who advised the Government on asset sales, completed a scoping study on Solid Energy in November 2011 it said that, as a coal company, it should have zero debt, like comparable companies in Australia

“Solid Energy didn’t want high debt and the professionals didn’t want high debt. The only people who thought high debt for Solid Energy was a good idea were National ministers. They clearly had no idea what they were doing.

“National MPs and ministers have dismissed our calls for an inquiry. Instead of providing more answers these documents simply raise more questions. It is incredibly arrogant for National to block an inquiry when hundreds of people have lost their jobs and the company is $389 million in the red.

“I am writing to the Auditor General to ask her to investigate Solid Energy. The Government has ducked for cover. We will keep digging until we find the truth behind Solid Energy’s collapse,” says Clayton Cosgrove.

ENDS

© Scoop Media