Jackson Report:
Dust still not settled on claims by Hardie's victims

Bob Briton

Last week the curtain came down on the Special Inquiry 
established by the NSW Carr Government into the adequacy of James 
Hardie's arrangements for dealing with claims from victims of 
asbestos-related disease. Commissioner David Jackson QC concluded 
his involvement with the case by handing down a 1000-page report 
that was scathing of the company's management and their attempts 
to avoid responsibility to those harmed by their products.

"The notion that the holding company would make the cheapest 
provision thought marketable in respect of those liabilities so 
that it could pursue its other more lucrative interests insulated 
from those liabilities is singularly unattractive. Why should the 
victims and the public bear the cost not provided for?" (1:25)

Good question. In fact, Jackson's report is full of good 
questions and damning observations of the disgraceful means 
devised by Hardie management to cut future compensation claimants 
adrift. For months the details of the scandal had been dragged 
through the press to mounting public anger.

It is now relatively common knowledge that in 2001 Hardie set up 
two entities, Amaca and Amaba, to take over the parent company's 
asbestos assets and liabilities. The assets involved were then 
stripped to provide funds for the Medical Research and 
Compensation Foundation (MRCF) — a charitable body to be 
responsible for allocating compensation to asbestos-related 
diseases attributed to Hardie products.

Directors, shareholders, the Australian Stock Exchange and the 
public were misled into believing that the $293 million involved 
would be sufficient to meet all future claims in full. The claim 
was apparently supported by a report from actuaries Trowbridge 
Deloittes, but it turned out that the advice had been based on 
information Hardie knew to be incomplete.

In the meantime, Hardie had become James Hardie Industries 
Netherlands and established a new headquarters in Amsterdam — 
where civil action from Australian courts could not touch them.

For all its expressed indignation, the Jackson report is downbeat 
about the likelihood of enforcing just outcomes in the case. The 
ball has been passed to the Australian Securities and Investments 
Commission (ASIC) to investigate whether charges should be 
brought against Hardie CEO Peter MacDonald and chief financial 
officer Peter Shafron for misleading interested parties over the 
adequacy of MRCF's funding.

While Mark Latham has committed a Labor Federal Government to 
reviewing the Commonwealth Corporations Act to prevent parent 
companies limiting their liabilities with the methods used by 
Hardie, Jackson himself has warned that changes would probably 
not survive a constitutional challenge.

The most significant immediate effect of the Jackson Inquiry has 
been the decisions of Latham and Howard to hand over donations 
from Hardie made to their parties since 2001 to the Asbestos 
Diseases Foundation of Australia. The moral status of donations 
from previous years (during which the dangers of asbestos were 
also known) was conveniently left open.

Most disturbing for victims were comments from Commissioner 
Jackson supporting Hardie's particular proposal for increased 
funding to victims. Since July, Hardie has been promoting the 
idea of a making more money available on condition that 
compensation be administered through a "statutory" or government-
run scheme. Victims would forego their common-law rights to sue 
the company for damages and the scheme would allow claims to be 
capped.

The ACTU and victims have rejected the idea and are not persuaded 
by Hardie's arguments that more money would be available to 
claimants by excluding expensive lawyers from the process. 
Hardie's sudden concern is backed up with a report by the 
company's own actuaries KPMG that legal costs might eat up 
between 25 and 40 per cent of the available payouts. However, as 
plaintiff lawyers Turner Freeman point out, evidence before the 
inquiry shows that legal fees have accounted for only 17 per cent 
of the costs met by MRCF — the body currently distributing 
compensation.

Despite the bloody nose inflicted by the Jackson Inquiry, Hardie 
is still clearly trying to draw a line under its liabilities and 
its responsibilities to the victims of its products. Nobody 
should be fooled by its "statutory scheme".

The position of Premier Carr to the proposal warrants scrutiny. 
He called for the Inquiry in the first place and has publicly 
rejected the Hardie statutory scheme in front of a meeting of 
asbestos victims last week. Later, however, he clouded the issue 
at a press conference by saying he had his own "national 
solution" in mind.

Unions do not trust Carr on these sorts of questions, not since 
he gutted workers' compensation law in 2001, abolished common-law 
claims by workers against their bosses and capped the damages 
available to workers. For the time being, Carr has handed 
responsibility for negotiations with Hardie over to the ACTU and 
asbestos victims. A QC or retired judge might have to be 
appointed in the event of an impasse.

The union movement may soon have to deploy the considerable 
forces built up in recent months. Last week, large and vocal 
rallies were held in Australian capital cities to coincide with 
Hardie's annual general meeting of shareholders.

International actions

A demonstration was also held outside James Hardie offices in 
Mission Viejo in California. Around 80 per cent of Hardie's 
business is now done in the US and the pledge of support from US 
unionists to their Australian comrades would certainly worry the 
transnational.

Unionists protested outside Hardie's headquarters in Amsterdam. 
Dutch trade unionists are taking up the issue and are calling for 
the behaviour of the corporation to be examined by the European 
Parliament. The British Trade Union Congress also sent 
undertakings of support to the ACTU from its annual conference in 
Brighton.