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May 30, 2014

NBN CEO avoids hard questions on California deaths

The government's hand-picked NBN CEO has used US court proceedings against him to refuse to answer serious questions about events that led to the deaths of nine people.

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The role of the NBN CEO Bill Morrow in events leading to explosions in the US that killed nine people will remain a mystery to the Australian parliament after the government yesterday used US court proceedings as justification for Morrow not answering Senate estimates questions about it.

The San Bruno pipeline explosion, in California in September 2010, killed 8 people in a San Francisco residential area, injured 66 and destroyed nearly 40 homes. The pipeline was owned by Pacific Gas & Electricity; a subsequent National Transport and Safety Board investigation found faulty welding in the pipeline had caused the explosion, and the Californian government is currently considering imposing a US$2 billion fine on the company, while the federal government considers criminal prosecutions. Another earlier explosion at Rancho Cordova in California involving a PG&E pipeline killed one man and led to the company being fined nearly US$40 million.

Morrow joined the company in 2006, became CEO in 2007 and left in 2008, and is named in a shareholder lawsuit against the company in relation to the explosions. The basis of the suit is that the company significantly underfunded its safety and maintenance budget while handing its executives, including Morrow, huge bonuses. An independent audit ordered by the Californian government found that from 2007-10, PG&E cut spending on pipeline safety, maintenance and operations programs while increasing executive bonuses. One Californian politician labelled the company’s actions “criminal”.

What does this all have to do with the NBN? Labor argues that Morrow, known as a “turnaround specialist”, has been hired by the government to play the same role he played at PG&E — slash costs and hit performance targets. Morrow is on performance incentives at the NBN, whereas his predecessor Mike Quigley refused to accept them.

Morrow last night revealed he has explained the lawsuit to officials at the time he was recruited by the government. Quigley was criticised for failing to tell the then-government about a US prosecution involving his former employer Alcatel-Lucent relating to bribery charges, although Quigley had not been directly involved in the case.

Efforts by Labor senator Stephen Conroy to question Morrow about his actions at PG&E were headed off by the government. Morrow declared in his opening statement that he wanted to refrain from saying anything about the case. Communications committee chair, Nationals senator John Williams, initially ruled that, on the basis that nothing said at committee hearings can affect court proceedings, Morrow would have to answer, until Liberal senator Mitch Fifield, as the minister on duty, claimed that Senate practice allowed witnesses to protect themselves in relation to litigation, which Williams then declared was sufficient basis for Morrow to not answer. That led to an hour of Morrow refusing to answer Conroy’s questions, though he occasionally explained that he would love to tell the committee all about the case, which he expected to emerge from vindicated, but simply couldn’t

But Morrow was subsequently allowed to interpret the restriction as meaning he didn’t have to answer anything about his time at PG&E whether it related to the case or not, even refusing to acknowledge that, as CEO, he might have approved the company’s budget.

It made quite a contrast to the questioning to which Quigley was repeatedly exposed as part of a Coalition campaign against him involving Alcatel-Lucent, both in Senate Estimates before that case was settled, and shortly afterward in a special NBN inquiry. “[T]hese are areas of legitimate interest and enquiry,” Quigley told one hearing.

Indeed.

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