Hardie drags out asbestos compo agony

Bob Briton

Last week representatives of the NSW Attorney General's 
Department and Cabinet sat in on discussions being held between 
the ACTU and James Hardie about the future of compensation to 
victims of the giant manufacturer's asbestos products. Shortly 
afterwards, the Carr Government announced that a review would be 
conducted into the state's current compensation scheme to see if 
legal costs could be kept down. The review is expected to be 
completed by early 2005.

ACTU Secretary Greg Combet had originally requested the review as 
a way around Hardie's previous dogged insistence on a statutory 
scheme that would strip asbestos disease sufferers of their right 
to seek compensation under common law. Hardie welcomed the news 
of the review.

The six weeks of talks that followed on from the Jackson Inquiry 
had become deadlocked over the issue of legal costs. 
Representatives of the building products manufacturer alleged 
that lawyers' fees in the current system could swallow up $400 
million of the over $2 billion (20%) expected to be needed to 
compensate claimants. At different times they have maintained 
that legal costs would account for 27 per cent, 30 per cent or 
even 40 per cent of payouts within the existing system.

During the Jackson Inquiry, however, plaintiff lawyers Turner 
Freeman revealed that legal fees account for only 17 per cent of 
the costs met by Medical Research and Compensation Foundation 
(MCRF) — the body currently distributing compensation that had 
been set up and left behind when Hardie moved its headquarters to 
the Netherlands.

"It is not appropriate that the unions and Hardie agree 
arrangements in these negotiations that affect the entirety of 
the system, nor is it up to Hardie to dictate the terms of 
changes to the compensation system in exchange for funding a 
compensation liability that is theirs to fund in any event", Mr 
Combet said after the government announcement.

However, it appears that Hardie is indeed steering developments 
to achieve by other means what it said it wanted at the beginning 
of the talks. Hardie is still insisting on a system involving 
mediation before the compensation matters go before the Dust 
Diseases Tribunal.

It now wants claimants to be penalised if they do not accept the 
company's offer of damages and a subsequent court ruling awards 
lower damages. Hardie claims its costs would be "halved" under 
such a scheme. If the unions and the NSW Government does not 
remain firm, Hardie may get its statutory system under another 
guise to the great detriment of asbestos disease victims.

Still avoiding responsibility

Hardie has persisted with its heartless stance in the face of 
considerable pressure. The Jackson Inquiry found that the company 
had schemed to avoid its full responsibility to asbestos victims. 
The NSW Government has threatened to pass legislation to make the 
corporation — not just its spun-off foundation — directly 
liable for compensation if the current talks break down. There is 
a growing boycott movement against James Hardie products and 
unions and victims now have a permanent protest outside the 
company's factory in Rosehill, NSW.

It appears, though, that the company has sympathy in high places. 
Last week SA Labor Senator Penny Wong called on Hardie Director 
Donald McGauchie to step aside as Telstra chairman in light of 
the ongoing asbestos scandal. Communications Minister Helen 
Coonan described the call as a "low act" and added, "Whilst we do 
support the claims of the victims — it is not just a simple 
matter of snapping your fingers — you have to be able to fund 
these claims."

Hardie did manage to snap its fingers and produce $10 million for 
disgraced former executives Peter McDonald and Peter Shafron. The 
company would probably claim to have snapped its fingers again 
recently with the announcement of an offer of $85 million to bail 
MCRF out of its current difficulties. At the moment the 
foundation has assets of $40 million as against $80 million in 
notified claims.

Talk of liquidator

MCRF managing director Dennis Cooper described the offer as 
"another example of spin over substance". He was not interested 
in any funding proposal unless the foundation's "legal rights 
against the Hardie group and its directors were totally 
preserved". While MCRF estimates that it has sufficient funds to 
meet claims until April, its grim situation will probably lead 
management to appoint a liquidator in early December.

The ACTU hopes that the NSW Government's review of the current 
court-based system will put the emphasis in discussions back onto 
the question of the financing of Hardie's liabilities by Hardie.

In view of Hardie's foot dragging, the strengthening of the 
community campaign against the company becomes a vital task. 
Shareholders will not bring Hardie to heel. The company's 
"success" in controlling the agenda so far saw share its price 
rise last week.