The Whitehaven Coal hoax tests the limits of legitimate issue activism and raises important questions for companies facing criminal action and fraud in the name of social causes.
It also raises important questions for regulators, and for politicians who condone law-breaking.
On Monday 7 January the share price of Whitehaven Coal collapsed after anti-coal activist Jonathan Moylan issued a fake news release in the name of ANZ bank saying it had withdrawn funding for a massive new open-cut coal mine in New South Wales. More than $314 million was wiped off the value of the company before the forgery was exposed. The share price largely recovered by day’s end, but not before many investors lost almost 9% of the value of the shares by selling on the false report.
Moylan, who said the stunt was to highlight environmental damage from coal mining, claimed to be “surprised” by the impact of his action. “A lot of people were taken in by it, but when you compare the cost of that to the health of our forests and farmland, it justified it.”
Facing a maximum almost $500,000 fine and up to ten years in prison if convicted, the 24-year-old apologised to Whitehaven shareholders who had lost money as a result of his hoax, but added rather disingenuously; “I certainly didn’t intend any harm to shareholders in Whitehaven.” Whether or not he intended harm, and whether he is prosecuted, is something the Australian Securities and Investment Commission has yet to decide.
Meantime, a furore broke out when Greens Leader Christine Milne praised the hoax as “part of a proud history of civil disobedience, to potentially break the law, to highlight something wrong.” Former Greens leader Bob Brown went even further and compared the hoax to “non-violent protest” by Gandhi, Mandela and even anti-slavery campaigner John Brown. Apart from the Greens veteran needing to re-read his history, such support triggered a predictable political response. Opposition politicians National Senator Barnaby Joyce and Eric Abetz of the Liberal party could hardly contain their venom, and even Government Senior Whip Joel Fitzgibbon (whose party is in alliance with the Greens) called for the hoaxer to be prosecuted.
Outside the party political arena, the case has triggered serious discussion about the limits of legitimate issue activism. Sydney Law professor Michael Adams commented that the difference between a public nuisance and civil disobedience is the impact on the general community. “A protest normally provides publicity for a cause and brings the matter to the general public’s attention. A fraud – in particular one that impacts the share market – has larger consequences.”
From an issue management perspective the whole event seems to have been a failure. Moylan claimed his hoax was designed to draw attention to the impact of coal mining. Yet apart from opinion pieces by his supporters, the great majority of media coverage was about the foolishness and naiveté of the hoax, and about the legal and financial implications of an attack on the integrity of the stock market.
Sadly for young Mr Moylan, the Whitehaven Coal hoax will certainly be remembered, but most likely not for the reasons he had hoped.