Mesothelioma Articles

Firm's Attempt to Cut Losses Shows Toll of Asbestos Use

Posted: April 30, 2004

Source: Inter Press Service News Agency

Bob Burton

For the last month, a government inquiry has been busy picking its way through an Australian building company's internal documents, investigating why an asbestos diseases fund for affected workers and consumers is facing bankruptcy.

CANBERRA, Apr 30 (IPS) - The probe highlights the continued health toll from the presence of asbestos in homes in Australia, decades after its domestic use and sale were banned. It is also worrisome in light of the fact that the heaviest use of asbestos today is in the Asia-Pacific region, including countries such as India and Thailand.

''Nobody knows with any confidence how many people will die because of asbestos. It is appalling that companies and governments allowed so much asbestos to be used for so long,'' said Ken Fowlie, a lawyer representing unions before a government inquiry into an asbestos disease compensation fund created by a major building products company.

The Australian company in question is James Hardie Industries Ltd, which until the mid-eighties was Australia's largest manufacturer of asbestos products -- from brake linings to asbestos cement sheeting for houses.

Some of its products containing the fibres so valued for their heat-resistant properties - but which cause deadly diseases such as mesothelioma - were exported to Malaysia and Indonesia during the 1970s. Mesothelioma is a cancer that has been diagnosed among patients some 20 to 40 years after exposure to asbestos.

Behind the firm's commercial success, the compensation claims against it were also mounting -- and are expected to climb further in coming decades.

The scale was such that in February 2001, James Hardie Industries Ltd established a non-profit trust in Australia, the Medical Research and Compensation Foundation, with 208 million U.S. dollars of assets to cover its liabilities for asbestos-induced diseases.

In its annual report that year, the company stated that the fund ''resolved its future asbestos liability for the mutual benefit of claimants and shareholders''.

Eight months after the foundation was established, Hardie moved its head office to the Netherlands.

According to documents provided to the inquiry, no sooner had the foundation been established than its actuarial adviser advised its directors that liabilities related to asbestos cases had been underestimated by up to 142 million U.S. dollars. More estimates indicate the shortfall could be 497 million U.S. dollars or more.

But Hardie refuses to make additional funds available to the foundation. ''If the situation is now as you have reported, it can only be due to factors not apparent at the time the foundation was established,'' James Hardie chief executive officer, Peter Macdonald, wrote in October 2002 when he rejected a request from the foundation for additional funding.

''James Hardie is not able to make additional funds available to the foundation. The company has no legal basis for such a use of shareholders' money and is, in fact, constrained from doing so under the Corporations Act,'' Macdonald wrote.

Hardie's refusal to provide additional funding is, however, not because the company is financially struggling. Last year, it sold over 800 million U.S. dollars of building products from its manufacturing plants in the Philippines, Australia, Chile and the United States.

However, Hardie's hardline strategy has backfired. The New South Wales government, fearing that many of the 24,000 people forecast to contract asbestos-induced diseases over the next 50 years would be left without access to compensation, established a special commission of inquiry.

In late February, the premier of New South Wales, Bob Carr, told parliament: ''We want to find out what James Hardie knew back in 2001 about the extent of its liabilities and whether the firm underestimated the amount of money it set aside for dust disease claims''.

The company has yet to appear before the inquiry, which is due to report by June 30.

Australia banned the mining of asbestos in 1966 and the domestic manufacture and sale of products using asbestos in the mid-1980s. While countries such as the United States, Australia and Europe have heavily restricted asbestos products, their use and manufacture remains significant in the Asia-Pacific region.

The volume of asbestos used in the Asia-Pacific grew dramatically in the last 30 years to a peak of over a million tonnes. While consumption in Asia has subsequently dropped by almost a quarter, it still remains at a level four times greater than it was in 1960.

The U.S. Geological Survey, which produces authoritative global assessments on the use and production of minerals, states in its 2000 assessment on asbestos that many of the world's largest remaining users are in the Asian region.

''The largest consumers in 2000 were Brazil, China, the former Soviet Union, India, Japan, and Thailand, which accounted for more than 90 percent of world estimated consumption,'' the report said. ''Consumption has increased in India, Indonesia and Thailand during the past couple of years while that of Japan has declined.''

The relatively recent boom in consumption in the Asia-Pacific means that asbestos-related diseases are unlikely to peak for several decades.

In 2000, Trowbridge Deloitte, the actuarial company that advised Hardie in Australia and subsequently the foundation, first estimated that claims would peak in 2004. However, two years later, it calculated claims peaking in 2009 and continuing until 2049.

''The reason that claims continue to mount is that the first wave of disease was those who were exposed to high levels of asbestos in mining, companies that manufactured products and users such as in shipping and power stations. The second wave was those who were exposed to it through things such as washing overalls,'' said Fowlie, a partner with the law firm Slater and Gordon.

With some one-third of Australian houses built before 1985 containing asbestos cement sheeting, the home renovation craze in recent years is potentially exposing many occupants to asbestos dust.

''Now we are seeing the start of the third wave of people often exposed to small amounts, such as kids playing in waste products after building, and those who have renovated their homes and been exposed to dust from cutting cement sheeting,'' Fowlie said. ''We just don't know how many people will be affected.''

Additional articles:
    Hardie Asbestos Talks "Positive"; Update This Week 12-20-04
    Hardie Ltd's compo may run out in four years 10-16-04
    Real good kick in the big end of town 9-22-04
    Hardie Under Fire 9-16-04
    Unsanctioned Sickness 9-9-04
    Early clue to asbestos disease gives hope 8-16-04
    On the back of Silent Assassins Inc. 8-9-04
    Asbestos victims fund has lawyers in a lather 7-3-04
    Deadly Stalker 5-6-04

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