Media release

Ernst & Young review of ‘corporate background checks’ shows up inadequacies in environmental licences for mega mines

June 27, 2016


Environmental Justice Australia has welcomed the Queensland Department of Environment and Heritage Protection’s decision to commission an independent review of the process for granting ‘suitable operator’ status to companies seeking environment licences for mining or infrastructure projects but is disappointed that the evaluation has failed to address the single biggest flaw in the current background check test – that it ignores foreign environmental offences.

“Before any company can build a mine in Queensland, the law says they must be checked for ‘suitable operator’ status. This is the corporate equivalent of a background check or character check,” said Ariane Wilkinson, lawyer at Environmental Justice Australia.

“Coal giant Adani, who hope to run one of the largest mines in the Southern Hemisphere, was able to be registered as a suitable operator with no scrutiny of the reports of serious harm to the environment and local communities related to the operations of the Adani Group in India and the failure of Adani Group companies to comply with laws and environmental permits.  

“DEHP has reported that an independent evaluation of this background check turned up flaws in the way suitable operator applications were completed and processed. That evaluation, undertaken by Ernst & Young, has revealed applications with no name or date, and applications with questions left unanswered.

“A key concern is that in the sample Ernst and Young reviewed, not a single application where a disqualifying event was disclosed by the applicant was ever refused by DEHP.  DEHP has also made a statement to Australian media that of the more than 1000 applications for suitable operator received since the process commenced in 2013, no applications have been refused as all were assessed as fulfilling the legislative requirements,” she said.

“The findings of the Ernst & Young evaluation follow our research reported last year, and were undertaken in collaboration with lawyers at US-based Earthjustice, and reveal major shortcomings in the way the department assesses the environmental records of applicants.  

“There is a significant failure to assess the real risks of giving applicants ‘suitable operator’ status because there is no requirement to disclose a connection with  previous environmental disasters, or ‘disqualifying events’ if they have occurred in foreign jurisdictions.” Ms Wilkinson said.

It also emerged that a mining company previously run by Mr Jeyakumar Janakaraj, CEO of Adani Australia, was found guilty of a major pollution incident in a river in Zambia, which saw highly acidic, metal-laden discharge released into the Kafue River at the time that Mr Janakaraj was the Director of Operations of that mining company. 

“If this had occurred in Australia, the criminal prosecution against that mining company when Mr Janakaraj was Director of Operations, would have had to be disclosed in the Adani company’s suitable operator application as a  disqualifying event,” Ms Wilkinson said.

“None of these foreign environmental offences had to be disclosed, because the background check process turns a blind eye to anything that happens overseas.

“Adani has had no trouble at all getting their ‘suitable operator’ status rubber-stamped in Australia, because under Queensland law there is no accountability mechanism to deal with foreign environmental offences,” she said.

“To protect our communities and our environment, our laws need to match reality. This is an era of multinational mining companies operating globally. Laws which ignore that reality are failing us,” Ms Wilkinson said.

“It’s clear that the suitable operator laws are letting us down. Queensland’s  Environment Protection Act must be amended to ensure that international environmental offences are taken into account when deciding whether to grant a company suitable operator status.

“In addition, the recommendations of the Ernst and Young audit, including to undertake risk-based checks where no disqualifying events are disclosed, should be implemented immediately,” Ms Wilkinson said.

Skip to content