ADJOURNMENT: James Hardie Medical Research and Compensation Foundation
9 August 2004
Mr ALBANESE (Grayndler) (9.16 p.m.) â€”Submissions are drawing to a close in the New South Wales special commission of inquiry into the asbestos product manufacturer James Hardie’s establishment of the Medical Research and Compensation Foundation. The commissioner, Mr David Jackson QC, is due to deliver his report to the New South Wales government in September. To date, the inquiry has revealed the following. Within the James Hardie group of companies there were two subsidiary companies that victims sued in order to obtain damages for their conditions of asbestosis, lung cancer, mesothelioma or other asbestos related diseases: the company that was involved in the manufacture and supply of asbestos cement building materials and insulation materials containing asbestos, James Hardie and Co. Pty Ltd; and the company that was involved in the manufacture and supply of brake linings containing asbestos, Hardie Ferodo Pty Ltd.
To date, many successful claims for damages have been brought against these companies. In 1994 James Hardie started transferring its active businesses away from these subsidiary companies in exchange for cash. Between 1995 and 1998 these subsidiary companies transferred more than $200 million in dividends and management fees to their parent company, James Hardie Industries Ltd. On 16 February 2001, James Hardie established the Medical Research and Compensation Foundation to handle all its future asbestos compensation claims. It transferred $293 million to the foundation to be invested in shares and property, with the intention, allegedly, that the investment income and eventually the capital would be spent meeting damages awards.
At the time of the launch of the foundation, James Hardie prepared a press kit, indicating that the foundation would meet all genuine claims. Eight months later, in October 2001, James Hardie received the approval of the Supreme Court of New South Wales to move its head office and its legal incorporation to the Netherlands. The company said at the time that this was being done for tax reasons. We now know that perhaps the real reason was that the Netherlands does not have a treaty with Australia regarding the issues involved.
Firstly, it has become clear that, when assessing future liabilities for the purposes of setting up the foundation, the most up-to-date claims, settlements and awards information was not used and the foundation was grossly underfunded. Secondly, in March 2003, James Hardie Industries quietly cancelled the partly paid shares. This was done without advising the court, its shareholders or the foundation. The foundation chairman, Mr Llew Edwards, said he appreciated that the foundation had insufficient funds to meet future claims and asked James Hardie to top up the funds. Additional funds were not forthcoming.
Counsel for the New South Wales special commission of inquiry, Mr John Sheahan, has now submitted that the company acted with disdain and reckless indifference to the plight of asbestos victims. In order to meet future claims, he says the foundation requires at least $2.24 billion. It currently holds only $125 million in assets.
The SPEAKER â€”Order! I hesitate to interrupt the member for Grayndler. I consulted the Clerk about whether any of the matters being raised are sub judice or subject to an inquiry. [start page 32543]
Mr ALBANESE â€”No.
The SPEAKER â€”I will obviously take the member for Grayndler’s assurance. He will understand that my interruption was to clarify that matter, because it is a matter that is currently being widely aired.
Mr ALBANESE â€”It is all publicly devolved. Labor will act on the recommendations of the Jackson inquiry. We should not tolerate companies shifting assets to those victims of this reckless company. There is evidence that James Hardie knew of the dangers in the 1930s. The New South Wales Dust Diseases Tribunal independently has found that, by 1950, employees had raised concerns that asbestos was toxic, that it was carcinogenic and that it was capable of causing fibrosis leading to death. The death is a painful and slow one. The company directors were well aware of this at the time.
The company has caused untold misery and suffering in this country. It is expected that this misery and suffering will continue and even escalate. More than 7,500 Australians are dying of mesothelioma. With 500 new diagnosed cases each year, an anticipated 18,000 cases will lead to death by this disease by 2020. In my view the company directors and those who knew what they were doing have these deaths on their hands. The fact that they are trying to avoid their financial obligations is immoral, criminal and should provoke anger in every decent Australian, as I am sure it does in every single parliamentarian in the federal parliament.