Mail & Guardian newspaper of February 4, 2014 reported that the managing director of a clay-mining company in Limpopo province became the first director in South Africa to be held personally liable for a mining-related environmental offence.
He received a five-year suspended sentence on condition that his company rehabilitates the environmental damage caused by its mining operations within three months. The cost of rehabilitation is estimated to be in the order of R6.8 million.
This is a landmark ruling since, for the first time, a company director was held personally liable for non-compliance by the company.
A medical waste incinerator did not comply with the conditions of its permit. The waste management company pleaded guilty and was fined R2 million - R1 million suspended for 5 years - and a company manager was fined R100,000 for illegal dumping.
The cost of cleaning up the illegal dumping site amounted to R5.5 million and the incinerator had to be re-built and upgraded at a cost of R17 million.
This case illustrated the eventual cost to company of non-compliance, and the fact that an employee can incur criminal liability.
A classic example of reputation risk occurred on March 14, 2012, when Greg Smith, Executive Director of Goldman Sachs submitted a letter of resignation to the New York Times in which he denounced the investment bank’s “toxic” and “destructive” environment.
He claimed that the bank did not comply with its fiduciary responsibilities to clients.
In the recent unreported decision of International Ferro Metals (SA) (Pty) Ltd v The Minister of Mineral Resources and Others (decided on 15 January 2015), the Labour Court dealt with the question whether the chief inspector had complied with the peremptory requirements to issue a section 54 instruction to the mine.
The inspector issued an instruction in terms of s54(1)(a) of the Mine Health and Safety Act (MHSA) that operations at the ferro-chrome smelter had to be halted by a specified deadline.
The instruction required Ferro to withdraw all employees from designated areas which allegedly had high carbon monoxide levels until such time as those were brought below the legal limit.
Ferro contended that the instruction should not have been issued because there was no breach of its obligations. Ferro approached the Labour Court to challenge the issuance of the notice and the validity of the guidelines which had to be adhered to when an inspector sought to exercise his powers when issuing a s54 notice. Ferro contended that should all the employees be removed from the areas, none of its working areas could operate and this would entail a complete shut-down of the ferro-chrome smelter.
The inspector contended that for as long as the employees had not been withdrawn from the designated areas, Ferro would remain in breach of the Department of Mineral Resources (DMR's) guidelines. The guidelines were purportedly issued in terms of s49(6) of the MHSA, which reads: "The Chief Inspector of Mines must issue Guidelines by notice in the Gazette". It was common cause that the guidelines had not been gazetted. Ferro thus argued that the guidelines should be set aside.
The court held that the guidelines were being enforced by the DMR in circumstances where they did not comply with the statutory requirements. The court noted that the wording of s49(6) of the MHSA is peremptory and the guidelines were therefore set aside due to non-compliance with this statutory requirement.
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