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Asbestos Compensation Issue – Australian Firm’s Executives Fined And Disqualified

by Gopalan on August 20, 2009 at 3:10 PM
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 Asbestos Compensation Issue – Australian Firm’s Executives Fined And Disqualified

Ten former executives of James Hardie Industries (JHIL), an Australian asbestos firm, have been fined and disqualified for their roles in making false and misleading statements over compensation claims.

The penalties follow April's landmark judgement where the former executives and directors were found to have breached corporate law in relation to asbestos claims and a corporate restructure.

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The former chief executive Peter Macdonald was fined $350,000 and banned from managing a company for 15 years.

Former non-executive directors including the chairwoman Meredith Hellicar were fined $30,000 and disqualified from running a company for five years.
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Handing down the ruling, New South Wales Supreme Court Judge Ian Gzell recounted how and the different clauses in the Corporations Act and the Corporations Law that he thought had been breached. That included misleading and false statements to the stock exchange, misleading and false statements at a press conference by the former chief executive Peter Macdonald and also false and misleading statements made by the former chief executive at a road show.

Now ASIC, the Australian Securities and Investments Commission wanted much larger penalties and in fact for each count, so for each breach of the corporate law each individual could have been fined up to $200,000 per count. But that didn't happen.

The firm, James Hardie itself, was fined $80,000. ASIC was seeking a fine of $200,000.

Australian Manufacturing Workers Union secretary Paul Bastian told reporters he was disappointed with the penalties and the length of the bans.

"Corporate law in this country needs some genuine revision about putting some balance back into it, making sure there are proper sentences and proper penalties imposed," he said.

"I don't think it will have much impact on any of them. I suspect many of them will continue to enjoy their lifestyles at the south of France or in the US."

Mr Bastian said the current James Hardie board should learn from their predecessors' mistakes so they could understand their legal and moral obligations to victims.

"What today's decision did was expose the extraordinary lengths James Hardie's previous board went to, to avoid victims, to avoid paying the compensation," he said.

"They did that because they saw them as no more than a line item on a balance sheet. They didn't see them as real people.

"I think what the current board should do is have a dialogue with victims. They should attend a bedside hearing of a sufferer who's about to die from mesothelioma, so the next time they look at a line item they know that there's a real person behind it, that there are real families behind it."

Asbestos disease sufferer Mike O'Donnell said the fines would not hit the directors' hip pockets very hard.

"These guys come from the top end of the city, they're all well heeled, the fines are peanuts, they won't be paying them anyway - they'll be paid by an insurance company or James Hardie," he said.

Source: Medindia
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