Ben Hills 

Claims of a cover-up have been made at the royal commission into Australia’s biggest disaster involving a public utility, last year’s explosion at Esso-BHP’s gas plant at Longford in Victoria. A Herald investigation unearths court ecords in which it is claimed that this is part of a world-wide pattern of “institutionalised obstruction of justice” by America’s largest oil company.

It was day 36 of the Longford royal commission when Paul Scanlon finally let rip. Standing before his microphone in the neon-lit hearing room high above Melbourne’s fashionable Collins Street, the burly barrister put into words the suspicions that had been thickening like autumn fog since the inquiry began into the fatal explosion that left nearly the entire State without gas for almost a fortnight.

First, there had been the discovery that the disaster investigation team scrambled from all points on the globe by Esso’s parent company, the giant Exxon Corporation of Irving, Texas, had produced not one but two reports into the explosion last September 25 which killed two workers, injured eight more, and did an estimated $1.3 billion worth of damage to the Victorian economy.

While the crippled plant that processed and pumped Bass Strait natural gas to more than a million Victorian industries, businesses and domestic consumers still burnt, a team of at least 60 Exxon employees flown in from Malaysia, Norway, the Russian Far East and the United States debriefed survivors of the blast and took control of company records. “You had a rattlesnake by the tail,” drawled one of these so-far unidentified investigators; “Runaway train. Couldn’t stop it,” commented another.

The first report, said Scanlon, would “never have seen the light of day” if the Melbourne Coroner had not smartly sent police into Esso’s offices to seize data from the company’s computers. Most damagingly, this report found that no safety inspection, codenamed “hazop,” had been done of the plant which blew up, an omission that “is considered a contributing factor to this incident”.

The second report omitted the reference to the hazop and a number of other findings which might have implicated Esso in the explosion. It had been “sanitised” for public consumption, according to Scanlon – Esso’s lawyers claimed that the first report was merely a draft.

Then there was the mystery of the missing computers – Scanlon claimed that six computers containing vital data had been “removed” by Exxon’s investigation team. The witness he was cross-examining, Esso’s Longford operations manager, Peter Coleman, said he had no knowledge of this.

A litany of other evidence has painted an alarming picture of events at the Longford plant in the days and weeks leading up to the rupturing through intense cold of a 14-tonne heat exchanger that set off that runaway train: severe cutbacks in maintenance staff, equipment breakdowns, a backlog of more than 1,000 items needing repair, antediluvian monitoring equipment which ran out of ink, entries missing from a logbook.

All this has had to be painfully prised out of Esso. Even the royal commission chairman, retired High Court judge Sir Daryl Dawson, has been moved to comment: “Esso hasn’t been forthcoming in its assistance to this commission with information … I did not get the impression that the first witness, the managing director [Robert Olsson, who tried to give evidence in secret], was forthcoming in identifying those persons who would be able to assist the commission.”

Esso has refused to let commission investigators directly access the company’s computer database, has refused to even name the investigators (every one flown in from overseas) involved in its own board of inquiry into the explosion, and has refused to disclose other information on the grounds of legal professional privilege, the legal principle that enables lawyers to speak to their clients in confidence.

Anticipating that privilege claims might delay and obstruct the commission, the Kennett Government changed the Evidence Act to abolish this right to confidentiality for royal commissions.

Esso, however, is so determined to keep its secrets that it has challenged the constitutionality of the legislation in the Federal Court.

Announcing this, the company’s spokesman, Ron Webb, said: “While Esso remains intent on co-operating with the royal commission’s inquiry, being required to do so without normal privileges, including legal professional privilege, could put it at a disadvantage in subsequent legal actions.”

Those “subsequent legal actions” are, of course, what this is all about. Insurers have already paid out in excess of $200 million to businesses – including Victoria’s car manufacturers which were forced to close down, laying off thousands of workers – crippled by two weeks without gas. Their final payout is expected to exceed $500 million, which Esso will have to pay if its negligence is found to have caused the explosion.

There are damages claims pending from the injured workers and the families of the two men who were blasted to bits and burnt. And on top of that, two aggressive Melbourne law firms – Slater and Gordon and Maurice Blackburn – have signed up more than 10,000 victims in a class action against Esso, which they claim is the biggest in Australian legal history.

Esso’s total liability may top $1 billion. Its loss will be vastly greater if, as he has hinted, Kennett abolishes its companies’ lucrative Victorian mono- poly as a result of the disaster, and allows South Australia’s Santos to enter the market.

As the evidence has accumulated, some of the barristers leading the dozen or so legal teams represented at the royal commission – every interest from the company itself to the insurers and the unions – have become increasingly outspoken at what they see as stonewalling tactics by the Esso team.

Ross Gillies, QC, appearing for the Insurance Council of Australia, queried why Esso “with all its engineering glitterati” should have engaged lawyers to investigate the accident if it was not intending to hide the causes of the disaster behind legal professional privilege. He said the company was seeking to be “as obstructive and as pre-disposed to concealment as it possibly can”.

But it was Paul Scanlon, representing the unions – a blunt-spoken man whose idea of relaxation is riding a tractor at his hobby farm near Victoria’s Gippsland Lakes – who on Day 36 finally used the C word that everyone had been avoiding: “… there has been, by Esso and Exxon, a massive cover-up in relation to material that has been provided to this commission and to the coroner …”

Esso’s chief counsel, John Middleton, QC, immediately jumped to his feet to denounced this as “an outrageous suggestion without basis”. But it was too late.

Within 15 seconds, Scanlon’s words were buzzing around the world, directly input by the commission’s stenographers onto the Internet, to places as diverse as the Caribbean, Florida, the deep Pacific and the rolling countryside of Oxford, where an eclectic band of lawyers is closely following proceedings.

The only thing they have in common is that they have all been involved in legal action with Exxon following various appalling disasters around the world during the past decade. And they all believe (to quote from a claim filed in the Federal court in Miami) that ” … the Exxon law department is practising institutionalised obstruction of justice.”

Publishing Info

Pub: Sydney Morning Herald
Pub date: Wednesday 24 March 1999
Edition: Late
Section: News And Features
Sub section:
Page: 16
Word count: 689
Classification: Accidents And Emergencies/Accidents/Gas/Longford Royal Commission Company/Esso Company/Exxon Corp
Geographic area: Vic
Caption: Paul Scanlon, Esso’s managing director, Robert Olsson