Pike River Coal Ltd and Enron Inc – an ‘optimistic glow’Posted: December 14, 2014
Pike River Coal Ltd. and Enron, Inc.
As I was finishing reading “Tragedy at Pike River Mine” by Rebecca Macfie (AWA Press, 2014), it occurred to me there was one fundamental aspect of the Pike River Coal Ltd mining project which was similar to the Enron experience from the nineties in the USA.
Enron Inc. was an energy company buying electricity from producers and selling it on, such as to state governments including California. The company expanded rapidly showing huge profits before it suddenly collapsed in a heap. As documented in a film called “The Smartest Guys in the Room”, the main appeal of Enron to the stock market and to ratings agencies was that Enron executives were so enthusiastic, so positive of success. The actual state of finances of Enron, including exposure to levels of high risk in the $billions, was missed or viewed as being of lesser importance. Enron had been rated ‘investment grade’ by Moody’s, Standard and Poor’s, and Fitch as close as four days before bankruptcy (December, 2001)*. The strength of this view in the marketplace was illustrated when the ratings agencies made no apology nor admitted any error on their part when Enron collapsed.
Similarly, Pike River Coal had from the beginning claimed it was a modern company which “will have the advantage of not only being a greenfield* site, but a greenfield organization.” This meant they thought it was an advantage that it was a company without mining experience; they could develop something new and better, appropriate for Pike River, almost from scratch. Although in following years there were continuing problems with production estimates not being met and safety plans not implemented, that would have to be ignored when making public statements because the new ‘reality’ was characterized by an Enron-like optimistic glow springing from a disengaged world view.
This was the ‘reality’ introduced into New Zealand by the Labour Government in 1984/87 through Roger Douglas and expanded by subsequent National governments, mostly through the removal of government regulations. The actual emerging world, growing largely from an understanding of climate change, was proving to be too constraining and their exploitative ideology had to be given free rein in the world of imagination regardless of the impacts on real people.
*source, Wikipedia: ‘greenfield’ : In many disciplines a greenfield is a project that lacks any constraints imposed by prior work.