Rohan Pearce
The James Hardie scandal is one of corporate Australia's worst. While the amount of money involved may be less than some of the high-profile corporate collapses of recent years, the cynicism with which Hardie's management evidently manoeuvred to limit the company's liability for compensation to victims of its deadly asbestos products business is breathtaking. But perhaps it's not surprising for a corporation that has long put the drive for profits before the lives of its employees.
On August 13, the special inquiry set up by the NSW government to investigate the Medical Research and Compensation Foundation, created by James Hardie to meet the corporation's compensation liabilities for its victims, held its final day of hearings. The inquiry's head, David Jackson QC, is due to issue his report on September 21. The inquiry was established after it was revealed that the MRCF did not have assets to meet projected compensation claims. According to an August 11 Sydney Morning Herald report, the shortfall is expected to exceed $1.5 billion.
The MRCF was established in 2001. On February 16 of that year, James Hardie announced that it had "resolved its future asbestos liability for the mutual benefit of claimants and shareholders". The MRCF was supposed to fund all future compensation claims and support medical research through $293 million worth of assets that James Hardie transferred to it.
"Effective today", stated a press release in 2001, "the consolidated profit and loss statement of the James Hardie group will not include costs associated with asbestos. From today, these costs will be borne by the new foundation."
In September 2001, James Hardie announced that 98% of shareholders had voted to support a proposed corporate restructure, which transformed James Hardie Industries Limited into James Hardie Industries NV, a Netherlands-headquartered company. This was evidently an attempt to remove the corporation's assets from Australia to eliminate the risk of its victims taking legal action to obtain compensation because of the huge gap between the assets of the MRCF and likely future compensation claims. There is no treaty between Australia and the Netherlands that would allow the corporation's Australian victims to sue for compensation in Dutch courts.
After the projected MRCF short-fall was revealed, James Hardie initially tried to deny responsibility for the foundation's crisis and played down its role in Australia's deadly asbestos industry. Perhaps the most hypocritical statement since the scandal broke has been this comment by CEO Peter McDonald, included in a June 30 report on ABC Radio National's June 30 PM program: "I'm not happy with the allegations that have been made against the company, and they certainly impact the company's corporate reputation. And I'm not happy with that either."
In an effort to limit the damage to its reputation, James Hardie circulated a misleading letter to its customers that downplayed its role in the manufacture of asbestos-based products. The letter claimed: "Former James Hardie group subsidiaries, Amaba and Amaca, are two of around 150 defendants who are brought into legal process by claimants. It has been estimated that they will be liable for around 15% of future claims in the Australian environment."
But as ACTU secretary Greg Combet explained on August 24, "it is known that James Hardie dominated the Australian market for asbestos cement products, with a market share of up to 90%". According to Combet, while the letter said that James Hardie "phased out the use of blue asbestos once the link with mesothelioma was 'firmly established', and that it phased out the use of asbestos altogether well before the government finally banned it last year", it "doesn't say that James Hardie companies continued to manufacture asbestos products for many decades after health risks were clear".
In fact, James Hardie was a leader in the cover-ups and neglect that characterised the asbestos-based building materials industry, not admitting the deadly effects of asbestos until the late '80s, when it was finally forced to pay compensation to its victims.
James Hardie's admission of asbestos' dangers came some nine decades after Lucy Dan, a British factory inspector, warned of the dangers posed to workers by exposure to asbestos. Her 1898 study, "Report on the health of workers in asbestos and other dusty trades", reported on the "easily demonstrated danger to the health of workers and because of ascertained cases of injury to bronchial tubes and lungs medically attributed to the employment of the sufferer".
The first successful claim for compensation by an asbestos worker was in 1926 in Massachusetts.
By 1930, it was known that asbestosis resulted from being exposed to asbestos. In 1935, according to briefing material produced by Worksafe Western Australia's SafetyLine Institute, a WA factory inspector reported on the effect that asbestos dust had on workers' lungs at a factory in Perth. It was the James Hardie factory.
The link between cancer and exposure to asbestos was confirmed in 1943, although it was suppressed by US corporation Johns Manville.
Inhalation of asbestos fibres, most of which are invisible to the human eye because of their size (3-20 micrometres), can cause a number of painful and lethal conditions: asbestosis (a form of lung fibrosis), mesothelioma, and lung and gastrointestinal cancer.
In the face of a mounting public campaign, including union-sponsored protests and bans on the use of James Hardie-manufactured building materials, the corporation has ostensibly backed down and agreed to take responsibility for ensuring its victims were compensated.
James Hardie's announcement, made on the last day of the NSW inquiry, was greeted with scepticism by those campaigning against the corporate giant. Bernie Banton, acting president of the Asbestos Diseases Foundation of Australia, commented: "I was so overjoyed at first that I nearly swallowed my oxygen hose. But I'm all too aware the real definition is in the fine print."
Banton, quoted in an August 14 AAP report, explained thatfor James Hardie to "have argued for 53 of the 54 days of a government inquiry that they had no liability to victims, and then to come up in the last five minutes of the inquiry with a turn-around decision, was a mind-blowing change in position".
The statutory scheme proposed by James Hardie would strip victims of their right to sue the company for compensation. On August 24, Leigh Hubbard, secretary of the Victorian Trades Hall Council, slammed the corporation's proposal. "James Hardie thinks that if it can change its chairperson, say they're sorry and offer a little bit more money they can have their way with the common law rights of asbestos victims." He urged people "not fall for these cheap tactics".
Hubbard said that while Victorian unions "are pleased that James Hardie has finally come to the party", he accused the corporation of "still attempting to blackmail the NSW state government into accepting their statutory scheme, effectively trampling on the common law rights of victims to sue".
"James Hardie", he added, "is also demanding that in return for having access to the money they tried to stash away in the Netherlands, victims not have the right to legal representation. They want sick and dying people to pit themselves against a giant multinational with no professional support or help. This demand is unacceptable, unjust and only further enrages asbestos victims."
While unions attacked James Hardie's proposal, NSW Labor Premier Bob Carr, although reserving his judgement until the inquiry hands down its findings, described the proposal as a "massive vindication of our government's decision to set up this inquiry".
Ironically, while Carr wants to take credit for James Hardie's flawed compromise, it was his government that gave the go-ahead for the company's relocation to the Netherlands.
According to a July 30 report by David Hardaker on PM, ALP-linked PR firm Hawker Britton was retained by James Hardie to "sell the concept it called 'separation from legacy' — in other words, cutting financial ties with asbestos compensation claims still in the pipeline". Hawker Britton lobbied Carr's government to allow the relocation of James Hardie to the Netherlands and set up the MRCF to cover future compensation payouts. The statutory scheme proposed by James Hardie has already been rejected by the Labor governments in Victoria, Queensland, Tasmania and the ACT.
Even if the inquiry recommends a just resolution that will ensure adequate compensation to James Hardie's victims, the question has to be asked: Is it enough? Compensation will at least provide some comfort to those whose have difficulty breathing and may suffer heart failure from asbestosis' scarring of the lungs or develop cancer of the lungs, stomach, intestines or rectum.
James Hardie is trying to rip-off the people who, while they may still be alive, it is already guilty of murdering.
Sue Bolton, a Socialist Alliance Senate candidate in Victoria and a co-convenor of Socialist Alliance's national trade union committee, told Green Left Weekly that this "is the result of the class bias of the legal system: If you or I killed an individual we'd land in jail, but if a corporation knowingly causes death or injury to workers or customers, they get a fine at most.
"Some 16% of all deaths in Australia between 1989 and 1992 were work related, but the most bosses typically have to fear is a fine, thanks to the absence of industrial manslaughter laws in every state and territory, except for the ACT.
"Bosses who kill should be jailed. In the case of James Hardie executives, they have known since the 1930s that asbestos is a killer and they didn't stop producing asbestos products until 1985. James Hardie's executives decision to continue producing asbestos for more than 50 years after discovering that asbestos is a killer means that they should be prosecuted for manslaughter. They are mass murderers.
"We're also dealing with a pretty clear-cut case of executives trying to rip off the corporation's victims and their families by restructuring their company in an attempt to avoid their responsibility to provide compensation. There should be pretty severe penalties for that sort of conduct."
Melbourne lawyer Rob Stary, who defended jailed union militant Craig Johnston, told Green Left Weekly: "There is an absolute capacity to prosecute those people because you can be charged with reckless conduct endangering life, and all you have to have is the foresight to the probable consequences of your action. And so, when they knew that asbestos was likely to cause fatal injuries and it's documented, and it's now said to be proved over all those years, there's no statute of limitations. Those directors should have been charged and still should be charged."
From Green Left Weekly, September 15, 2004.
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