James Hardie Case - Ethical Misconduct

James Hardie:

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Introduction

The Medical Research and Compensation Foundation (MRCF/the Foundation) was set up by James Hardie Industries Limited (JHIL) in February 2001, supposedly with ‘sufficient funds to meet all legitimate compensation claims anticipated from people injured by asbestos products that were manufactured in the past by two former subsidiaries of JHIL.’1 In October 2003, the Foundation revealed that it faced a significant shortfall in funds2 such that in its present financial position it would be unable to meet claims beyond the first half of 2007.3 In February 2004, David Jackson QC was commissioned to inquire into and report upon the following terms of reference:

1. the current financial position of the Medical Research and Compensation Foundation (“the MRCF”), and whether it is likely to meet its future asbestos related liabilities in the medium to long term; 2. the circumstances in which MRCF was separated from the James Hardie Group and whether this may have resulted in or contributed to a possible insufficiency of assets to meet its future asbestos related liabilities; 3. the circumstances in which any corporate reconstruction or asset transfers occurred within or in relation to the James Hardie Group prior to the separation of MRCF from the James Hardie Group to the extent that this may have affected the ability of MRCF to meet its current and future asbestos related liabilities; and; 4. the adequacy of current arrangements available to MRCF under the Corporations Act to assist MRCF to manage its liabilities, and whether reform is desirable to those arrangements to assist MRCF to manage its obligations to current and future claimants.4

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* Final Year student (BA/LLB) at the University of Sydney. The author wishes to thank Jennifer Hill and Andrew Tuch for their valuable comments on the draft of this article. All opinions, and any errors, remain my own. 1 James Hardie Industries Limited, Media Release: James Hardie Resolves its...