Research Assignment – James Hardie Industries
- Research the case using public sources and describe the facts of the case (e.g. Who? Where? When? and How?
James Hardie was considered to be one of the Australia’s highest producers of asbestos and related products in the early 2000 which included multiple products like asbestos like insulation products, multiple types of asbestos sheets of cement, types of pipes, friction parts which mainly comprised of brake assemblies and clutch lines. James Hardie was considered a dominant player in market, mainly in sheets arena.
In 1937, the James Hardies Group changed its operational structure and all of the manufacturing and supply of product lines of asbestos was shifted to its subsidiary organisations which were the organisations called as James Hardie & Coy Pty Limited and Hardie-Ferodo. James Hardie & Coy was the major contributor of income for James Hardie Industries Group to early 1995.
After 1995 continuing till 2000, James Hardie Group stripped off assets from James Hardie & Coy and kept it only with liabilities relating to Asbestos of James Hardie Group (Gunz and van der Laan 2011, pp. 583-596).
In Feb 2001, James Hardie Group initiated and set up MRCF – Medical Research and Compensation Foundation in Australia and New Zealand with $300 million of assets which were with the asbestos producer organisations of James Hardie & Coy and Jsekarb Inc. Also, in the same strategy, James Hardie & Coy and Jsekarb were removed James Hardie Group with any liabilities arising in later stages relating to asbestos (Spender 2003, pp. 223–254).
The then CEO of James Hardie who was Peter McDonald told Australian Stock Exchange and public in general that MRCF- Medical Research and Compensation Foundation was fully supplied with needed funds which were required so as to fulfil legitimate asbestos compensation claims in future (Dunn 2005, pp.339-353).
In Oct 2001, New South Wales Supreme Court agreed to an application coming from James Hardie Industries so that they can move up its complete operations to Netherlands taking away all of its $1.9 Billion AUD of assets from all of its Australian Organisations. The New South Wales court was given assurance that these assets can be used in later part for compensating up the unfulfilled claims of all of unpaid Australian Creditors as well as unpaid Asbestos victims. Although, one fact was not taken into premise that Netherlands is only one of two nations which haven’t made any tax claiming treaties with Australia (Gunz and van der Laan 2011, pp. 583-596).
In March 2003, James Hardie Industries which was now Netherlands based company strapped away all the connections with its previous Australian Asbestos producer organisations and denied up any promises to pay remaining 1.9 billion AUD to any of its previous Australian companies when they require them for compensating the claims (Spender 2003, pp. 223–254).
James Hardie also didn’t told New South Wales Supreme Court, New South Wales government or ASX of cancellation of $1.9 billion Australian dollars grant to its subsidiaries. This move started several campaigns led by workers unions and workers who were left with asbestos diseases in New South Wales. After these agitations on 27th February 2004, New South Wales prime minister gave authorisation to David Jackson so that he can make a special inquiry commission for MRCF judging whether it has adequate funds and capacity of repayment, and why it is separated from its parent James Hardie Group.
As Public outrage grew intensely as asbestos groups and union campaign increased with the fraud of James Hardie Group was becoming clearer to general public (Gunz and van der Laan 2011, pp. 583-596).
On July 2004, Counsel assigned for James Hardie Inquiry submitted a suggestion to willingly give higher funds to MRCF based on the fact that in the statutory liability compensation scheme in which it is established so as to limit the legal rights of claimants and cap their liability payments.
In August and September, after receiving the request of ACTU, State and Territory governments let off the proposal of James Hardie in which they wanted to establish the liability compensation scheme for asbestos victims (Spender 2003, pp. 223–254).