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Mesothelioma & Asbestos News Page
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Asbestos probe hopes lift Hardie shares
22 Sep 2004 08:10:26 GMT
Source: Reuters
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(Recasts, share price, legal comments, prime minister, union)
By Daniel Morrissey
SYDNEY, Sept 22 (Reuters) - Shares in Australian building products firm James Hardie Industries NV climbed 6 percent to a two-month high on Wednesday on hopes that the cost of a year-old asbestos claims scandal may now be quantifiable.
The reaction came as the corporate watchdog began a probe into Hardie which made asbestos products from the 1920s.
Australia has the world's highest death rate from mesothelioma, caused by exposure to asbestos, which was used as a fire-retardant in wallboards and other products, before it was banned in 1984.
The probe follows a state government inquiry that found Hardie broke the law and deceived victims and financial markets by underestimating the fund it would need to compensate thousands of asbestos-related disease sufferers.
"The (inquiry) ... brought back some realistic figures and outcomes and it helps clarify the valuation for James Hardie," said Hans Kunnen, head of investment markets research at Colonial First State Fund Managers.
But, for Australia's Securities and Investment Commission (ASIC), the issue is far from over.
It said it was "deeply concerned" about the serious corporate governance issues raised in the 576-page inquiry report and assured the public it would "vigorously pursue breaches of the law".
"Our investigation will include the conduct of certain directors and officers of the James Hardie group of companies and associated parties, and market disclosures made by the companies and individuals," ASIC Chairman Jeffrey Lucy said.
A Hardie statement to the Australian Stock Exchange on Feb. 16, 2001 that a foundation it set up to compensate victims was fully funded was "misleading and deceptive," inquiry Commissioner David Jackson said on Tuesday.
He also said Hardie directors, including Chief Executive Peter Macdonald and Chief Financial Officer Peter Shafron, broke federal law by relying on faulty consultancy estimates, known as the Trowbridge Report, when deciding on the size of the fund.
SHORTFALL IN RANGE
Investors were relieved to see the report found the shortfall in the fund Hardie set up to pay asbestos related claims was within the range estimated at the six-month inquiry.
The inquiry said Hardie should have set aside up to A$2.2 billion ($1.5 billion) in a compensation fund, seven times the A$293 million pool it created in 2001 for sufferers of mesothelioma, a deadly disease that hardens the lungs.
Shares in Hardie closed up 4.8 percent at A$6.08, off an intraday high of A$6.16 and outpacing a 0.3 percent rise in the wider overall market <.AXJO>.
The stock is still about a fifth below a record high of A$7.81 struck last October, before the foundation the company set up said its fund faced a shortfall in cash to meet claims.
Hardie proposed a statutory scheme on the last day of the government inquiry last month after saying it would ask shareholders for extra money despite having no legal obligation to top up the fund.
LAW REFORM
Professor Ian Ramsay, director of Melbourne University's corporate law centre, said there were limited prospects of successful litigation under existing laws for additional compensation, but Prime Minister John Howard said the law might be changed.
"If there are changes to the law that are needed, those changes will be made," Howard told local radio, although he added he had not yet made a proper assessment.
The country's trade union council called for law reform to enable asbestos disease sufferers to "pierce the corporate veil" which it said protected Hardie's parent company from being sued for the liabilities of its former subsidiaries.
Jackson said in his report the scheme proposed by Hardie might be a starting point, but the proposal was "presently in an embryo, and sometimes contradictory, form".
Victims' groups and trade unions fear a statutory scheme would lead to reduced benefits. "We're here to ensure a statutory scheme isn't a one-size-fits-all solution," New South Wales Labour Council Secretary John Robertson told local radio.
Hardie, which earns around three-quarters of its sales in the United States, acknowledged on Tuesday the "seriousness of the findings and comments" of Jackson's report and said it would respond after a full analysis.
(Additional reporting by Victoria Tait, Ian Chua and Sonali Paul)
Back to Original Article on Mesothelioma
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TOWANDA - Towanda School District officials opened bids Tuesday for the asbestos removal portion of the planned $10.1 million expansion/renovation project at the Towanda Middle School building.
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