Mesothelioma Articles

Hardie Ltd's compo may run out in four years

Posted: October 16, 2004

Source: by Jamie Walker, Queensland Newspapers

FORMER Queensland deputy premier Sir Llew Edwards has refused to guarantee that the compensation fund he chairs for James Hardie asbestos victims will exist beyond 2008.

In his first lengthy interview since a NSW special commission of inquiry last month issued devastating findings against James Hardie's senior management, Sir Llew warned that the Medical Research and Compensation Foundation would be wound up unless the company tips in at least $1 billion in additional funding.

With claims on the fund running at up to $40 million a year, the $293 million in start-up capital and assets committed by James Hardie would be exhausted within four years, he said.

Asked whether he could offer an assurance to asbestos disease sufferers compensation would be available beyond that time, Sir Llew told The Courier-Mail: "I can't give that assurance at all.

"This foundation has the responsibility to carry out its obligation at law to meet the needs of victims of asbestosis in products manufactured by Hardie's. If there is no money, we do what every company does when they have inadequate assets to meet liabilities – we go into administration or liquidation."

The foundation was established three years ago by Hardie under its controversial strategy to re-register overseas and isolate its burgeoning asbestos disease compensation liabilities from the core business.

The Asbestos Diseases Foundation of Australia said 53,000 Australians would be affected by the time asbestosis incidence peaked in 2020, a quarter of them with incurable mesothelioma.

The inquiry, headed by Brisbane barrister David Jackson, QC, reported on September 21 that the company had misled the sharemarket, the directors of the foundation and the NSW Supreme Court – though in the latter case this was inadvertent.

US-based chief executive Peter Macdonald may face criminal charges pending the outcome of separate investigations by NSW authorities and corporate watchdog the Australian Securities and Investments Commission.

It is understood the foundation has now realised the last of the assets committed by James Hardie by entering into an interim contract to sell a number of the company's former industrial sites, including one at Eagle Farm in Brisbane.

Sir Llew declined to comment on the impending sales.

As negotiations continued this week between ACTU secretary Greg Combet and James Hardie representatives, Sir Llew revealed the foundation had recently paid a record $3 million out-of-court settlement to a young asbestosis victim in NSW.

The fund had outlaid $80 million so far, but Sir Llew said he was concerned that up to 40 per cent of out-of-court settlements were being soaked up by lawyers fees.

He said it was crucial that future compensation arrangements be standardised across the states to avoid the blowout in compensation costs in NSW that was in part responsible for the liability crisis at James Hardie, producer of an estimated 70 per cent of asbestos products sold in Australia.

But he would not be drawn on the company's demand for the NSW Government to introduce a statutory compensation scheme as a condition of it lifting funding to the foundation.

The Jackson inquiry reported that Hardie's asbestos compensation liability could top $2.2 billion over the next 30 years – 10 times what the company put in to what it claimed in 2001 was the fully funded compensation scheme headed by Sir Llew.

State Liberal Party leader and deputy premier from 1978 to 1983, Sir Llew, 69, was a director of the then James Hardie Industries Ltd for a decade prior to his appointment as foundation chairman in 2001.

He said he would not have taken on the role had he known the true extent of the fund's liabilities.