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Greg Combet: Morality will prevail over profit

September 27, 2004

NOTHING in my working life has upset me as much as James Hardie's attempt to walk away from people who are suffering disease and death because of exposure to the company's asbestos products. It highlights a disconnection between commercial decisions and morality which is sickening.
The advice of investment analysts following the release of the damning report by the NSW Special Commission of Inquiry into James Hardie demonstrated just how fundamental this disconnection is. Record volumes of shares in the company were traded in response to analysts' advice urging investors to buy, buy, buy. The advice appears to be based on the belief that James Hardie has no legal obligation to pay compensation to victims of its deadly products.

These analysts must live in a cocoon.

The inquiry by David Jackson QC, handed down last week, found that the James Hardie restructure and move to the Netherlands three years ago has left the compensation fund for asbestos victims by the company at least $1.5 billion short. This means that thousands of Australians who are suffering or will suffer an asbestos-related disease, including those condemned to a painful death by mesothelioma, may be left without compensation.

Jackson also concluded that the company and its senior executives engaged in misleading and deceptive conduct for which criminal charges may be laid. Jackson also found that the NSW Supreme Court was misled. Corporate regulator the Australian Securities and Investments Commission immediately launched its own investigation.

company's last hope for a new government-run scheme that would limit compensation for victims. Carr has also commissioned the ACTU to conduct any negotiations with James Hardie.

The company's claim for a new statutory compensation scheme represents a belated and highly conditional recognition that it will have to pay up. But it also represents a demand for a stunning windfall reward for its disgusting corporate behaviour, at the expense of victims.

The company must not be rewarded in this way.

The Jackson report identifies many problems with the company's proposal for a statutory scheme, including the inherent inequity of a company-specific approach. Hardie victims could follow a different process and receive inferior compensation compared to asbestos victims of other companies such as CSR, which are meeting their obligations.

The Hardie scheme would also see victims lose in real terms as medical and other costs are expected to rise at a rate faster than the proposed level of Hardie compensation payouts.

In any event the James Hardie proposal is dead. Who could trust anything the company put forward?

The starting point for any resolution of the disgraceful mess involves an acceptance by James Hardie that it will compensate all victims of its products.

Beyond that it will be necessary to examine ways in which the existing asbestos compensation systems can be improved. There is scope for improving the efficiency and cost of the court-based processes.

Investment analysts must recognise that the long-term value of the company will only be realised if James Hardie meets its obligation to pay compensation. And that is because a full-scale industrial, legal and legislative assault on the company can be expected if no settlement is reached. And it won't stop at James Hardie.

There will also be a focus on the role and conduct of Hardie's legal and actuarial advisers in the under-funding of the Medical Research and Compensation Foundation.

The ACTU does not want to go down the path of further conflict if it is avoidable. The best outcome for the company and the victims lies in a settlement which delivers long-term profitability for James Hardie. Profitability will be the source of funding for compensation.

This is also the best outcome for investors. As Carr has warned, if James Hardie fails to settle, its share price will fall "until you won't notice it on any stock exchange in the world".

Investors and their analysts would do well to understand that morality will ultimately have a large bearing on the value of James Hardie. If I were an investment analyst I'd be saying the sooner the company pays up, the better.

Bill Whiley, 1927-2004

Michael Organ

The following is an edited version of remarks made in the House of Representatives by Greens MP Michael Organ on August 12.

I rise today to speak in memory of my dear friend Bill Whiley, who passed away last Thursday evening, August 5, at the age of 76, as a result of the onset of asbestos-related mesothelioma.

I came to know Bill on the Sandon Point community picket, set up in March 2001. Bill was an active supporter of the picket, and it remains in place as we speak due in large part to his efforts.

Sandon Point was just one of the many union and community pickets he supported during his long life. Bill's philosophy could best be summed up in the words: “If you don't fight, you lose.” He was a fighter for the ordinary Australian: a fighter to the death.

Bill was born at Millthorpe, near Orange. He began his working life in 1947 as a shunter on the NSW railways, based in Broken Hill and working throughout the western districts of NSW.

Bill was radicalised by the 1949 coal strike. The following year, he got a job in the Broken Hill mines and joined the Communist Party because he was “fed up” with the Labor Party after it supported the jailing of Miners Federation leaders.

Along with his good mate and mentor Bill Flynn, Bill Whiley fought the entrenched power of the ALP's right wing on the Barrier Industrial Council and was the last Communist Party of Australia councillor elected in Broken Hill. Bill was a long-term member of the Broken Hill Field Naturalists Society and an early and strong advocate for conservation issues.

In 1975, Bill moved to the Illawarra and began his life as a coalminer at Coalcliff, north of Wollongong. He quickly became involved with the local union, and I understand that the manager was sacked because he hired him. Bill went on to become lodge president and was elected to the southern district board of management. In 1982 he was at the head of the hundreds of miners and steelworkers from the Illawarra who stormed Old Parliament House in Canberra.

His retirement from the coal industry in August 1987 only meant one thing for Bill: more time to spend on industrial and community campaigns.

In 1988 he stood on an Independent/Greens ticket with well-known unionist and environmentalist Jack Mundey for the NSW upper house.

For the past few years, Bill was secretary of the NSW Retired Mineworkers Association and at the time of his death he was secretary of the NSW Combined Pensioners and Superannuants Association, in which he played a leading role in the campaign to protect Medicare.

Bill joined the Greens around the time of my election to this place in October 2002, and the Cunningham result and rise of the Greens throughout Australia in recent years had given him hope, he told me.

Towards the end of July, Bill joined a unique band of activists to be awarded life membership by the South Coast Labor Council in recognition of his long involvement in significant industrial and political campaigns in the Illawarra.

Bill was a rare individual who cared deeply about the lives of ordinary Australians and worked tirelessly to improve them. He was against unfairness, exploitation and inequality wherever it was found. Bill's ideals of openness, inclusion and tolerance were the antithesis of modern “wedge” politics, and stand as an example to us all.

From Green Left Weekly, September 29, 2004.
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