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Hardie + corporate governance « Previous | |Next »
April 24, 2009

So James Hardie have finally had a day of reckoning---ten former directors have been found to have breached their duties by making misleading and false statements about the firm's ability to pay asbestos's compensation. The blue-chip board claimed in a statement to the Australian Stock Exchange in February 2001 that the trust for victims was fully funded and could meet future claims when it was latter to have found to have a $1.5---2 billion shortfall. In doing so they breached their statutory duty of care and due diligence.

James Hardie have a track record on bad corporate governance--they shifted their domicile to the Netherlands in an apparent attempt to evade compensation liabilities, For once, the Australian Securities and Investment Commission (ASIC) did their job of a regulator---it bought a case in 2007 against the whole board, including the non-executive directors. They needed to as their track record as regulator on enforcement is mixed, and their credibility is on the line.

This is the first time that anyone from Hardies has been held by the courts to have acted unlawfully. However, Hardies have taken a hard line on compensation. They acknowledge that there is a funding shortfall for compensation, but say that they will not consider alternative funding arrangements to make up the shortfalll.

What will happen to other former high flying corporate directors who presided over corporate collapses in which shareholders were fed constant misinformation but who have so far escaped any sanction whatsoever. ABC Learning Centres for instance. Or Allco Finance? Nothing seems to be happening on these fronts. That is the norm.

| Posted by Gary Sauer-Thompson at 10:06 AM |