“Culture of avoiding accountability”: Whistleblower debunks Santos’ claim oil spill didn’t kill dolphins

The Australasian Centre for Corporate Responsibility​ (ACCR) is commenting on the statement and photos from a Santos whistleblower claiming that an oil spill from the Varunus Island Gas Plant appears to have resulted in the death of dolphins.

Commenting on the update, Alex Hillman, Lead Analyst at the Australasian Centre for Corporate Responsibility (ACCR) said:

“Late last year Santos downplayed a 25,000 litre oil spill from its Varanus Island Gas Plant that occurred in March 2022. The company inferred that multiple dolphins dying at the same time and location of the oil spill was coincidental.

"A brave whistleblower has however come forward with disturbing allegations to the effect that Santos engaged in a ‘subsequent cover-up’. The whistleblower says this incident indicates that Santos is an organisation ‘comfortable with a culture of avoiding accountability’.

“Corporate culture springs from the Board and CEO and flows to a company’s employees. The existence of an accountability avoidance culture of the kind alleged by the whistleblower should be of concern to investors.

“For a former employee to bring forward allegations like those tabled in Parliament raises red flags. If Santos has engaged in a cover-up and misled investors and the public on this matter then the leadership responsible must be held to account.

“The whistleblower is calling for Santos to be held accountable for its behaviour. Shareholders are well placed to do this and they are entitled to expect that Santos’ remuneration structure creates incentives for the company to act responsibly and appropriately.

“Investors will be looking closely at the yet to be released 2022 remuneration report. If the company does accept responsibility for this incident and associated impacts, an appropriate response should be reflected in executive remuneration for last year.

“Investors gave an embarrassing “first strike” against Santos’ remuneration report at the 2022 AGM, demonstrating an evolving  concern about Santos’ executives’ incentives.

“Given the company’s aggressive oil and gas expansion plans, many of which lack the backing of local communities, shareholders should be paying particular attention to the questions raised by the whistleblower’s report. Corporate transparency and accountability have never been more important than at this moment in energy transition.”

Background

The 2021 Santos remuneration structure (2021 Annual Report p35-61), allocates 7.5% of the corporate scorecard to environmental performance. If there are any ‘environmental incidents with a consequence of moderate harm or greater’, this metric is allocated a score of 0. Since all species of WA dolphins are listed under the Federal Environment Protection and Biodiversity Conservation Act, it seems reasonable that causing the death of dolphins would be classed as moderate harm. The 2021 remuneration report concluded that Santos had achieved ‘stretch’ performance against this indicator, which converts to 167% of the target payout. When considering the rest of the scorecard performance, this resulted in $970,000 being allocated for environmental performance, which would not have been awarded if the metric was allocated a score of 0.