The heap leach pad failure and its messy aftermath have now brought to a head the simmering tensions among the parties that are still reckoning with the aftershocks of such a terrible event.
In a surprise move, the Yukon government petitioned the court to place Victoria Gold into receivership. This was an unprecedented move. Its rapid success in wresting control of the mine away from management most likely spells the end of the 27-year-old company as shareholders know it.
For the government to have taken this extraordinary action against one of Yukon’s biggest taxpayers could only mean one thing: a complete loss of confidence in management to handle the clean-up, as the government has repeatedly stated.
Not helping management’s cause was the steady drip of embarrassing revelations concerning lax safety culture, tolerance of drug use, work-arounds accident reporting, and other breaches. With each bad news, trust and confidence in management erodes further.
To make matters worse, for weeks after the accident, VGXC management’s public response was sparse, forcing the government to take the heat from the media for a failure that wasn’t theirs. This certainly did not endear Victoria Gold to the government.
In my last blog post — https://www.haivanle.com/spiral/ — I reported that the Premier of Yukon had castigated VGCX as one of “the bad actors” operating in the territory. Generally speaking, politicians are very careful with their words. His anger and displeasure with VGCX must have been so great that it spilled out into public view.
In hindsight, this historic legal move most likely has to do with the Na-Cho Nyak Dun First Nation’s very public request to the government to remove VGCX’s management. A few weeks ago, when I first heard of this, I said to myself, Absurd. Impossible. Only shareholders vote to remove management. Governments don’t do this.
But it’s clear that in the small pond that is the Yukon, First Nations are highly influential. Cross them at your peril.
MISSED OPPORTUNITIES ALL AROUND
Looking back, I see so many missed opportunities by management to credibly handle this crisis by communicating tirelessly and demonstrating transparency. Rewind the clock back to the days following the accident. Imagine that management had taken the following actions:
- Setting up a new web site (or devoting a section of its website) to the crisis where all stakeholders could access the latest news about the crisis without having to rely on rumours. This online info centre would have all the latest press releases and contact information, maps, photos, questions and answers, and other resources for interested parties. Imagine that all the spots where water sample were taken and the results were displayed there for all to see.
- Issuing weekly progress reports, including specific actions taken that week; and a timeline to fix the remaining issues.
- Appearing next to the government spokesperson at their weekly press briefing, fearlessly facing reporters, and giving out straight answers;
- Humbly acknowledging mistakes, apologizing publicly, and assuring the public that such an accident will never happen again;
- Not sparring publicly with the government whether a berm is needed or not. (Why alienate the government further by going public with the disagreement?)
When facing an unexpected crisis, the tendency is to hunker down and hope the problem will fade away. But that’s precisely the wrong approach. Prompt and credible disclosure, tireless communication, and the humility to own up to the failure go a long way toward restoring stakeholder confidence — and regaining credibility.
Absent those, the crisis can easily spiral out of control as this unexpected legal blow amply demonstrates.
