Investigation reveals ALS Newcastle lab altered test results to increase quality and value of export coal

TESTING TIMES: An independent investigation has found ALS Newcastle Coal Services was at the centre of a scandal involving fake coal analysis reports designed to increase the value of exports. Picture: Marina Neil
TESTING TIMES: An independent investigation has found ALS Newcastle Coal Services was at the centre of a scandal involving fake coal analysis reports designed to increase the value of exports. Picture: Marina Neil

TESTING giant ALS has called in NSW Police to investigate its Newcastle lab operations following revelations that coal sample reports were faked to artificially boost the quality and value of Australian exports.

An independent forensic investigation, carried out by McGrathNicol, found approximately 45 to 50 per cent of coal tests were "manually amended" at ALS testing facilities to make it appear the coal was better quality.

An ALS spokesman confirmed on Tuesday that three of four senior staff members suspended in February, while the company awaited last week's investigation outcome, worked at Newcastle. All four have since left the business.

Coal analysis certificates are issued by ALS labs in Newcastle and Mackay.

It's understood the ALS coal superintending unit processes more than 39,000 samples for shipping analysis, which equates to about 3000 certificates each year, or 40 per cent of the Australian market for testing coal samples.

The independent investigation, commissioned by ALS, found coal sample results were "manually amended without justification" in Newcastle, Mackay, Gladstone and Emerald.

It found reports had been falsified dating back to 2007, when ALS acquired coal-testing company ACIRL.

It is alleged the test results were changed so the coal appeared to give off more energy than it actually did, making it more valuable.

ALS Newcastle Coal is Australia's largest coal superintending lab that employs more than 100 staff. The Mayfield-based operation began in October 1996, when it was known as Actest.

ALS chief executive Raj Naran described the findings as "very disappointing".

"This is a very serious breach of the ethical standards we expect from everyone who works for ALS, and we have taken strong action to put an end to the behaviour," he said.

"Now that we have established the extent of the issues within the coal superintending unit, our focus is on upgrading systems and processes to ensure the integrity of coal certifications and reassure our clients."

The issue came to light earlier this year when the Australian Financial Review reported allegations in an unfair dismissal case that Australian miner TerraCom had worked with ALS to falsely upgrade the quality of its coal in export documentation.

ALS chief executive Raj Naran

ALS chief executive Raj Naran

TerraCom has strenuously denied the allegations from its former commercial general manager Justin Williams who alleges he was dismissed from his role after rejecting demands to make ALS change its analysis results.

Mr Williams claims as much as $195 million worth of coal shipments to Asia could have been impacted.

The contested allegations are contained in a legal document lodged in the Federal Circuit Court against six of TerraCom's directors, including former Leighton boss Wal King, the chairman of the coal producer.

"Such unlawful acts consisted of demands that I cause ALS Coal to alter the analysis results of coal shipments in order to inflate invoice values and to deny customers their contractual rights to reject shipments that did not comply with minimum coal specifications," Mr Williams said.

Following the court allegations, ALS commissioned an independent investigation into the claims and suspended the "four most senior staff" of the coal superintending and certification unit pending the outcome.

The global testing giant announced last week that while the investigation found up to half of its coal certificates had been manually changed without justification, there was no evidence of bribery or third-party payments.

ALS employs 15,000 staff worldwide testing everything from coal to water. Mr Naran said the investigation found the problem was isolated to the coal testing unit.

"The employment of the general manager Coal Services has since been terminated and the other three staff are no longer employed by the business," an ALS statement reads.

"ALS and its relevant subsidiary are in the process of referring the matter to the NSW Police, in accordance with legal obligations."

TerraCom's founding chairman was Craig Ransley, who was labelled corrupt by the Independent Commission Against Corruption in 2013 due to his alleged dealings in the proposed Doyles Creek training mine.

Mr Ransley was later cleared of all allegations and returned as deputy chairman of TerraCom last month.

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This story Newcastle lab at centre of international 'fake' coal analysis scandal first appeared on Newcastle Herald.