Mesothelioma: A Killer Lurks in the Lungs

Mesothelioma & Asbestos News Page

Home Page

No laurels for Hardie
Richard Gluyas
September 29, 2004

MEREDITH Hellicar, with tours of duty as a diplomat, Alan Bond's manager of corporate affairs and an AMP director, is a veteran of crisis management.
However, the James Hardie chairmanship, requiring a delicate balance between shareholder interests and compassion for the victims of horrendous asbestos diseases like mesothelioma, will be her sternest test.

The inevitable tension between those roles was on display yesterday, when Hardie fell a long way short of satisfying a community desire for accountability in the company's senior executive ranks.

The company announced that chief executive Peter Macdonald and chief financial officer Peter Shafron would stand aside in the wake of last week's findings by a special inquiry into Hardie's asbestos liabilities that both men had breached their duties as company officers.

Macdonald will remain in the US and run Hardie's business operations, reporting to a still to be determined acting CEO, while Shafron will undertake a number of projects in the US and the Netherlands.

Hellicar concedes that she and her board have set up an extraordinary situation - a former CEO will be reporting to an acting CEO - pending the outcome of an investigation by ASIC into the whole asbestos fiasco.

"I'm not denying the circumstances are unusual," she says.

"We have a very successful chief executive, but he's standing aside in recognition of the seriousness of the situation.

"Some companies would have kept their CEOs on.

"I'm not trying to diminish in any way the seriousness of what's happened, but there's plenty of situations where bigger mistakes have been made."

The truth is that many investors, the Australian Shareholders Association aside, are highly supportive of Macdonald - and the double-digit profit growth that he has regularly achieved.

For Hellicar, the group's continuing growth and financial strength is essential if it's to meet an estimated $2 billion shortfall in its asbestos liabilities.

Amid the clamour for Macdonald's scalp, that was one factor the board considered. Another was an entitlement to natural justice.

It's an argument inevitably raised by someone in Macdonald's situation, who would be well armed with his own legal advice.

Hellicar denies outright that Macdonald has held a legal gun at the board's head since last week.

She notes that Macdonald appeared before David Jackson's six-month special inquiry as a witness, not an accused person, and did so without legal representation.

But surely, whatever his achievements, Macdonald had failed dismally in short-changing the Orwellian-sounding Medical Research and Compensation Foundation, set up to meet future asbestos claims, by up to $2 billion?

In doing so, Hardie had been badly damaged, and its reputation and global brand trashed.

Is that not enough to warrant dismissal, regardless of natural justice considerations?

"No one is denying mistakes were made, but we don't believe Peter Macdonald's dismissal is in the interests of anyone," Hellicar says calmly.

"We have to weigh up the (Jackson) report, the ASIC investigation, issues of natural justice and the interests of shareholders and claimants.

"It's a complex mix, and perhaps only those on the inside can properly assess it.

"It's a tough but fair outcome for Peter Macdonald to stand aside."

Hellicar won't entertain questions about how long it's likely to take for Hardie to find its acting CEO.

She says a search firm has not been retained, which in other circumstances would tend to point towards an internal appointment.

But again, these are unusual circumstances, with the chairman indicating, without saying as much, that Hardie was likely to choose someone from outside the company. The reason is fairly obvious. "You could think through the pros and cons of having Peter Macdonald reporting to an internal appointment," she says.

The difficulty in finding a well-credentialled candidate will be compounded by having Macdonald in reserve, sweating on the ASIC investigation and any charges it decides to lay -- and then the outcome of those charges.

The Hardie board's concern about natural justice, and its stop-gap solution announced yesterday, inevitably raised the prospect of a comeback by Macdonald if he emerges unscathed.

"That is possible," Hellicar says.

"We are not signalling anything either way.

"We will weigh up those things."

Macdonald, for his part, believes he has nothing to fear from Jackson's findings, or ASIC. He issued a statement yesterday saying he had stepped aside "in the interests of James Hardie and its shareholders", pending further clarification of the commission's findings.

"I acknowledge that the funding provided to the foundation that was established to pay asbestos disease sufferers has proven to be insufficient," he says.

"I apologise for any anxiety and distress that this funding shortfall may have caused.

"It is my intention to vigorously defend myself against allegations made by commissioner Jackson, at the appropriate time and in the proper forum."

Hellicar, as a Hardie director since 1992 who was elevated to succeed an ill Alan McGregor, was herself involved with the establishment of the controversial foundation. She says it was always the board's intention to fully fund the trust.

"Quite patently it was under-funded and we regret that; it was not our intention," she says.

"But our belief is we can fund this in an affordable way."

If there is one message the chairman wants to get across, it's that Hardie, contrary to "the propaganda from the plaintiff lawyers", will meet its commitments.

She says this key message has not been heard above assertions by rival lawyers that Hardie wanted to put a cap on claims or subject them to a formula.

"We are willing to pay," Hellicar says.

"But it's totally reasonable to have as a condition that it's affordable and capable of being financed by shareholders."

Back to News Page

Continue with:

Quincy smelter trail free of asbestos By GARRETT NEESE, Gazette Writer RIPLEY - Results from testing done on the Department of Natural Resources recreational trail near the former Quincy Smelter Works site are currently being analyzed, according to a Michigan Department of Natural Resources supervisor.

Asbestos scare shuts down Iqaluit metal dump WebPosted Sep 28 2004 09:30 AM CDT IQALUIT - Workers at Iqaluit's old metal dump have been ordered to shut down operations while a possible asbestos contamination is investigated.

CEO manages to pull off great escape By Alan Kohler September 29, 2004 Peter Macdonald is a lucky guy, no doubt about it. He gets a leave ticket from the ugly and dangerous James Hardie front line, keeps running the business from the safety of the bunker and gets the same wage as before - base pay plus bonuses.

Fire Service Sues over Asbestos Dangers By Pat Hurst, PA News The Government is to be sued by a fire brigade for not warning firefighters of the dangers of asbestos, it was revealed today.

UPDATE:James Hardie Admits Moral Obligation For Asbestos By Morag MacKinnon Of DOW JONES NEWSWIRES SYDNEY (Dow Jones)--A week after the release of a damning report into James Hardie Industries NV's (JHX) handling of asbestos liabilities, Chairwoman Meredith Hellicar admitted Tuesday that the company has a moral obligation to compensate victims.

MERSEYSIDE Fire Service is suing the Government over the death of one of its officers due to asbestos, in a case that could open the floodgates for millions of pounds worth of compensation claims.

James Hardie CEO and CFO Stand Aside Following Asbestos Enquiry The Board of James Hardie Industries NV has reviewed the report of the Special Commission of Inquiry into the establishment of the Medical Research and Compensation Foundation.

Asbestos scandal forces Hardie CEO, CFO to step down 28 September 2004 SYDNEY: The top two executives of James Hardie Industries NV stepped down today, a week after a government inquiry found the company broke the law and lied to thousands of asbestos victims and financial markets.

Meeting to focus on hospital asbestos concerns Tuesday, 28 September 2004 There will be a meeting today between the Department of Human Services, Echuca Hospital and the Health Services Union about the welfare of hospital staff.