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pulp mill saga

In the Land of the Blind, the One-Eyed Man is King

(Dr) Warwick Raverty, Clayton South, Victoria
2011/08/11 6:28 am

Dr Raverty's devastating revelations from inside the assessment process of Gunns Ltd's Tamar Valley pulp mill plan

[I will add my thanks to Garry Stannus for what is, in my opinion, one of the most elegant and succinct summaries that I have read of the whole Gunns' Pulp Mill debacle (Pulp mill permit: Three working weeks ...).]

As someone who came to the matter at the invitation of the former RPDC to advise on, and assist in writing the Environmental Emission Limit Guidelines for any New Bleached Eucalypt Kraft Pulp Mill in Tasmania, I see the debacle as of one of epic proportions that has badly affected many thousands of lives quite needlessly. I say needlessly, because it is clear to me that ninety percent of the blame for all the needless suffering, waste of money, opportunity and careers can be laid at the feet of two men - two men whose arrogance, stupidity, and unprofessional and unethical behaviours have caused the devaluation of a once mighty company by some 95% at today's date.

I will not mention the real names of those two men for obvious reasons, but readers of this fine e-journal will know well to whom I refer - for convenience I will refer to them as Jester and Lester. Both men are now retired from Gunns, living no doubt in luxury supported by the very substantial golden (some would say platinum - 'he leaves the Company today on GOOD TERMS') parachutes with which the Directors of Gunns rewarded these two on their severance.

These were noble metal parachutes woven from the hard earned money that many 'Mum and Dad' shareholders entrusted to Gunns' Directors. And at the feet of the self-same Directors, I would lay another nine of the remaining ten percent of the blame for the debacle leading to the collapse of Gunns. Like all company directors, these men were charged with exercising stewardship over their shareholders' investments, and for ensuring that people in the company below them behaved both ethically and within the confines of the 'Law of the Land'. Although few directors can be expected to be expert in the technology underlying their businesses, when the stakes are high they have a legal duty to seek out expert opinion, particularly expert opinion that might be contrary to the 'group think' within the executive arm of the company and to ask the hard questions - questions such as 'Is it really prudent to eliminate full evaluation of an alternative site for our 'bet the company project' at such an early stage? - a question that might have arisen in the mind of any Gunns' Director worth his sinecure in the months leading up to August 2005.

In all of these duties, the non-executive Directors of Gunns failed abjectly and they should properly be held to account by the many thousands of shareholders who have lost substantial sums of money. With hindsight, the contributing factors to the train wreck that Gunns has become, including the GFC, the rise of the AUD and the steady trend towards FSC stewardship over commercial forestry worldwide, are clear and obvious. It is my opinion (and that of all of my former colleagues in the pulp and paper industry - some very senior indeed) that these last mentioned factors played very little part in the saga. They are simply the final nails in the coffin of what had become a very rotten pair of walking corpses.

After the RPDC had successfully completed the task of writing the 'Tasmanian Environmental Guidelines' in late 2004 - general Guidelines for the whole State that took NO ACCOUNT WHATSOEVER of Gunns or their plans, I was invited to join the Assessment Panel for the Project of State Significance (POSS) that was declared in early 2005 concerning Gunns Pulp Mill proposal. I accepted that invitation, relying somewhat naively on all of the mealy mouthed assurances of then Premier Lennon, assurances that have since become so infamous. Assurances that the assessment would be independent, robust and thorough and that the Government would be bound by the RPDC's final recommendations. I guess we were all a little less 'worldly wise' in early 2005.

From my perspective, the Assessment process went according to plan for the first six months - until 26th August 2005. For it was on that day, that Jester and Lester, pulled the rug out from under what had been an independent, robust and thorough Assessment looking at two potential sites for the POSS. Quite unwittingly on that day, they also pulled the rug out from underneath any chance of the POSS obtaining a social licence and thereby pulled the rug out from under the feet of all Gunns' investors who were relying on future dividends and capital gains from their Gunns' shares to support their future wellbeing.

The rug was pulled when Jester and Lester, almost certainly with the approval of the entire Board of Directors of Gunns Limited, informed the RPDC that they were eliminating any further consideration of a second potential site (at Hampshire) and that all further detailed investigation would be conducted on a single site at Long Reach. It is an understatement to say that I was stunned by this news. I am bound by the RPDC Act to keep confidential unminuted discussions between members of the Assessment Panel - a situation that seems to be normal in the 'open, transparent' government and administration of the State of Tasmania. However, based on the adage that for evil to prevail it is only necessary for men of goodwill to do (and say) nothing, I am prepared to make one small act of defiance of that unjust law relating to confidentiality.

In the interest of everyone who has been adversely affected by the ensuing events, I am prepared to state (on oath) that every other member of the Assessment Panel was also stunned by the news that Hampshire had been ruled out of contention. 'Whatever are they thinking?' and 'Are they crazy?' were two questions that went unanswered across the table at the next meeting of the Panel, All four Assessors recognised that the Hampshire site was the site that most easily fitted the stringent requirements of the Tasmanian Environmental Emission Guidelines. Equally, all four Assessors recognised that Long Reach, situated as it is in a densely populated Valley subject to fog, stagnant air flows and frequent inversion layers was going to require far more stringent regulations if the air and water quality of the Valley and Bass Strait were to be properly protected.

My own view at the time, as the main assessor of technology, was that there was less than a 10% chance of existing kraft pulp mill technology complying with the Tasmanian Environmental Emission Guidelines in such a challenging location. The need for more stringent regulations in sites having particular geophysical, meteorological and community features had been clearly spelled out in the Guidelines, yet Jester continued bleating for two full years after that fateful day that the RPDC was being unreasonable in asking for additional information and claiming that we were dragging out the process unnecessarily. Jester also claimed (untruthfully) on many occasions that his proposal had met all of the requirements of the Guidelines. It is little wonder that Gunns lost so much of its public credibility and support.

In September 2005, I relieved my own distress at having to keep an open mind on what I saw as a very flawed and incomplete proposal by recalling one of the results of a word competition held by the editors of the 'Washington Post'. The competition invited readers of the 'Post' to invent new words (and meanings for them) by adding a single letter to an existing English word. The word that lept out of the pages of the 'Post' at me was 'BOZONE' which the inventor had defined as 'a colorless, odorless gas that surrounds the heads of stupid people and prevents bright ideas from sinking in to their brains.' The inventor of the word bozone went on further to say that there was no evidence that the 'bozone layer' was diminishing as time went on. By way of light relief, I suggested to other Assessors that both Jester and Lester were possibly affected by bozone when they made their August 20 decision. There was no dissention, but the suggestion remained unminuted. The irony of the connection between bozone and ozone, one of the gases used in the Total Chlorine Free bleaching process that Gunns steadfastly refused to adopt was not lost on any of us.

It would be quite wrong to conclude that the work of the Assessment Panel was in any way biased, or less than thorough in the ensuing 16 months. Through the remainder of 2005 and all of 2006 we worked extremely hard, aided by some of the best pulping technology experts in Australia, Canada and Sweden, to try and establish whether any pulp manufacturer had been able to site a giant 1.1 million tonne kraft pulp mill into a valley with similar features to the Tamar without diminishing the quality of life of the community, or the quality of the environment. We and our international advisors could find no such mill. Lester claimed that a mill on Hainan Island in southern China would be the model for Long Reach and could meet the requirements of the Tasmanian Guidelines. We asked for information from Jester and Lester to satisfy ourselves on this point. It never arrived. What additional information Gunns did provide in March 2007 was late, garbled, confusing, inconsistent and ultimately not what the Assessment Panel asked for - a fact confirmed much later by Christopher Wright in his Hornsily suppressed draft letter that would have informed Jester and Lester that their additional information was 'critically deficient'.

Meanwhile other events prevented the initial Assessment Panel continuing its work and making a recommendation to Government. It became apparent that a senior flunky in the Government's Pulp Mill Task Force who shall remain nameless, but let's just call him Bobster (the name sounds quite mellifluous when combined with Jester and Lester) had signed a covert deal with CSIRO to provide advice concerning the relative toxicity of treated effluent from the bleaching of eucalypt chips (as envisioned by the Tasmanian Guidelines) and treated effluent from the bleaching of pine wood chips (that was added to the POSS by Gunns in early 2005 and which was NOT envisioned by the Tasmanian Guidelines). No member of the Assessment Panel was aware of this secret contract until November 2006 and it only came to light following investigations by Solicitor General, Bill Bale attendant upon claims by the barrister for the Tasmanian Greens that CSIRO had published an opinion on its website that might lead an ordinary person to conclude that I was biased towards approving the POSS.

This situation in legal terms is called 'apprehended bias', something that all judges, magistrates and quasi-judical officers, such as members of RPDC Assessment Panels, must avoid - whether the apprehended bias is of their own making, or in my case and that of Julian Green, not of our own making. Julian Green had specifically warned Premier Lennon by letter in February 2005 that any communication between public servants outside the RPDC and the CSIRO would create apprehended bias and severely compromise the legality of the RPDC's decision. Premier Lennon either failed to communicate this vital piece of information to Bobster, or Bobster chose to ignore it and signed the fateful secret contract with CSIRO months later. When Bobster's actions came to light, Julian and I were advised by Bill Bale to resign forthwith, or risk a lengthy legal challenge of bias by the Tasmanian Greens in the Supreme Court of Tasmania. As this legal challenge could have delayed the RPDC decision for many months, Julian and I duly resigned in order to avoid further delay to the RPDC Assessment. For his lack of professionalism, as is often the case in Tasmania, Bobster was rewarded with a senior position in Forestry Tasmania where I am told he has managed to do for FT single handedly, what it took Jester, Lester and four non-executive directors to do to Gunns Limited.

So there you have another chapter in the sorry saga of the Great Gunns Train Wreck of 2005 - 2011. A train wreck in slow motion certainly, but a train wreck nevertheless. Like many train wrecks it was caused by human error, rather than by mechanical failure - by a train driver who was so deluded by his own arrogance and ignorance about the complexity (and danger) of the Tamar track down which he chose to drive at such high speed. His engineer, Lester, fanned his delusion by feeding him with incomplete, half-baked (and sometimes false) information about the Tamar track ahead. Meanwhile the shareholders' representatives, sitting comfortably in their Pullman carriage, quaffing their cognac and lighting their Havana cigars with their shareholders' banknotes, gazed placidly out of the carriage windows admiring the scenery they felt would soon be theirs for the taking - without (apparently) questioning Jester, or Lester, why they had raced through the well marked junction that said 'Safe Track to Hampshire' at such high speed.

The tragedy is, despite the GFC, the rise of the AUD and FSC certification issues, had Jester and Lester slowed the train at the junction and fully considered why the sign saying 'Risky Tamar Track' included that particular adjective, rather than 'Safe', Gunns' Hampshire Kraft Pulp Mill would, in my opinion, have been approved in late 2006 as a Totally Chlorine Free Bleached Kraft Pulp Mill of 1.1 million tonnes capacity. It would probably have commenced construction in early 2007 with international bank finance and have been completed in mid-2009. Today, two years later it would be producing close to its fully capacity of pulp from 100% plantation eucalypt of which the a major portion would be imported from Portland and Geelong through the Port of Burnie, providing additional maritime jobs in both Tasmania and Victoria. That is not just my opinion but also that of the bulk of high-ranking people in pulp and paper companies to whom I have spoken.
According to polls taken in 2007, some 80% of northern Tasmanians would be happy with the Mill's operation at Hampshire - and arguably a higher percentage by 2011, once the Mill had proved its environmental credentials. Yes, the pulp output might be somewhat less than 1.1 million tonnes, because of the GFC, but China the Mill's main intended market still has a booming economy and a high demand for the office papers into which the Hampshire kraft pulp would be converted. Profitability of the mill might have had a few dips because of the fluctuations in the AUD, but just like iron ore and coal, the Chinese are still buying. Instead of being suspended at 20 cents, Gunns' share price would probably be at least $5.22 (based just on the 2005 price and 3% inflation over the next 6 years, not including any premium for the Mill asset, or annual dividends).

Even FT might be solvent! Sad isn't it?

Released from the strictures of the RPDC in early 2007, I did my very best, at considerable financial and emotional expense, to paint this vision for Steve Kons, Will Hodgman, John Howard, Malcolm Turnbull, Peter Garrett, Bill Heffernan, Bob Brown, Christine Milne and Peg Putt. Only the last four people were even prepared to listen and most of the four agreed with my view. I was called 'a f*cking loser' and assaulted by Lester for my efforts at Canberra Airport in September 2007.

Obviously, many members of the Tasmanian Parliament share some of the remaining 1% of the blame for this fiasco, but I would say no more than that. As electors, we generally get the politicians that we deserve. Because few of us join political parties and attend grass roots meetings to put our views forcefully, we get ambitious, gullible and greedy parliamentarians in the main (with some notable exceptions). They inevitably see themselves as 'in the club' with the likes of Jester and his ilk and when the offer of economic prosperity without environmental damage is made, how many such people will question the basis on which the offer stands.

After all, if sound, the offer will inevitably lead to re-election and a much better chance of gaining a lucrative parliamentary pension down the track. Such politicians will certainly go through the motions of asking the hard questions - including first class travel to pulp mills around the world that have been warned in advance to be on their best behaviour by a Finnish company that stands to earn about $100 million if the politicians make the 'right decision'. Being escorted by a lobbyist employed by the proponent is surely just 'right and proper'. How else would you avoid witnessing any 'inconvenient truths'.

No, politicians in the main are a product of 'we the people' and cannot be expected to be stewards of our share portfolios. Jester and Lester and all the folk in the Pullman carriage on the other hand are such stewards. It is they who have wrecked the train and many lives. It will soon be time for them to make recompense. I see a very large class action further down the track and hopefully all Directors will be held personally liable even if the body corporate is dead and buried.

[Republished with permission from Tasmanian Times]

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