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James Hardies: corporate governance « Previous | |Next »
December 4, 2004

The saga of James Hardies' evading its responsibilities and liabilities for the abestos-related diseases (eg., mesothelioma) caused by the use of asbestos in its products from the 1940s onwards, is accurately captured by Allan Moir.


James Hardies first knew that asbestos was dangerous as far back as the 1930s. Not only were the workers kept in the dark about the danger of blue asbestos causing cancer, the company grossly under-funded the Medical Research and Compensation Foundation, the fund which allocates compensation to asbestos claimants. James Hardies Industries was not willing, to properly fund it. They gave the MRCF $293 million, and washed their hands of the whole compensation problem.

The AMWU anticipates that around 53,000 people will be affected by their contact with asbestos products between now and 2020. Most authorities predict that claims will total $1.5 billion plus a figure that would leave an unfunded liability. The Foundation is facing liquidation.

James Hardies washed their hands of the whole abestos compensation problem by packing up and leaving Australia for good. They moved their headquarters to the Netherlands in 1996, and JHIL became JHINV. At the same time, Hardies set up two companies, Amaba and Amaca and handed over its asbestos products interests to the two new corporate entities.

This legal move enabled Peter MacDonald, Hardies ex-CEO, to make these kinds of public statements about asbestos products:

"The products were the products of Amaca and Amaba. They weren't the products of James Hardies Industries Ltd which was the holding company. It's never itself produced these products. So the liability lies with those companies."

This view, which implied that the parent company had no moral or legal obligations to dying Australians, was said with a straight face.

This is an act of corporate bastardry and you can see why Hardies was dragged kicking and screaming before a NSW government inquiry--the Jackson Inquiry. Macdonald was found to have broken trade practices and corporations laws during James Hardie's three-year campaign to rid itself of liabilities to asbestos disease sufferers.

Meredith Hellicar, the new chair of James Hardies Industries, apologises to victims. Offers of compensation to all victims are still tied to a statutory compensation scheme with strings attached. James Hardie Industries is moving for tort law changes to reduce victims' rights, and its strategy is to continue to play hardball.

This saga is good example of bad corporate governance in Australia.

| Posted by Gary Sauer-Thompson at 4:29 PM | | Comments (0)