||Issue No. 239||24 September 2004|
Interview: True Matilda
Politics: State of Play
Industrial: Capital Dilemmas
Unions: Rhodes Scholars
National Focus: Rennovating the Lodge
International: People Power
Economics: A Bit Rich
History: Mine Shafts
Safety: Sick Of Fighting
Organising: Building a Wave
Poetry: Anger In The Bush(es)
Review: The Battle Of Algiers
Culture: The Word On The Street
The Locker Room
I Say I Say I Say II
Vote Early, And Often
No Surplus Of Generosity
Billions Hidden Behind the Veil
Unions are leading the pre-election charge for corporate law reform after James Hardie Industries was found to have shuffled assets amongst subsidiaries in a bid to deprive dying people of $1.5 billion.
Hardie's strategy to defeat people who contracted lung diseases from its products was similar to that used by Patrick, Metro Shelf and to, some extent, Ansett to deprive employees of entitlements.
"All these companies have structured their affairs so their liabilities and their assets are in different places," ACTU official George Wright said. "The law needs to be changed to stop innocent people from losing out.
Wright dismissed business sector claims that changes to limited liability would stop companies operating effectively.
"There are provisions for getting behind the corporate veil in the US," Wright said. "It doesn't mean the end of capitalism."
Unions want the corporate veil lifted when workers entitlements are pinched or Australians are deprived of legitimate compensation.
They raised their demands after a commission of inquiry lambasted James Hardie's ethics and morality before concluding that, under current law, little could be done to curtail its behaviour.
Institutional shareholders celebrated by pushing the company's stock up by more than 10 points.
The Jackson Inquiry remained largely silent about possible changes to Corporations Law that could stop the sort of behaviour if found objectionable.
Paul Bastian, the force behind chasing James Hardie to ground, said Commissioner Jackson's recommendation to allow the veil to be pierced in cases of injury or death did not go far enough.
"James Hardie is just the latest in a litany of cases where the big end of town has used this strategy to avoid its obligations," the AMWU secretary said.
"We certainly support the call for people like James Hardie's victims but it must be extended to workers who have been cheated of their entitlements."
NSW Premier Bob Carr has written to Howard and Latham urging them to formulate proposals for corporate law reform.
The Jackson Inquiry found James Hardie had underfunded the trust established to meet its asbestos liabilities by $1.5 billion.
Commissioner Jackson raised the possibility of legal action against Hardie's CEO, Peter Macdonald, and chief financial officer, Peter Shafron.
Macdonald was found to have knowingly misled the stock exchange while James Hardie, itself, was found to have breached the Trade Practices Act.
Jackson was highly critical of Macdonald for announcing that the company's asbestos foundation would be fully funded. He described the statement as "false in material particulars and materially misleading."
Jackson also produced damaging findings against actuarial giant, Trowbridge, saying there could be grounds for it to be sued for more than $30 million.
The findings came after months of hearings into James Hardie's corporate restructure that eventually saw it move to the Netherlands after assuring the NSW Supreme Court it would leave $1.9 billion worth of partly-paid shares in Australia. That arrangement was cancelled at a secret directors meeting a year later.
Carr rejected Hardie's plan for a statutory compensation scheme and called on it to negotiate a settlement with unions and victims groups.
Bastian called for Macdonald and Shafron to step down or be sacked before negotiations began.
The bottom line, he said, was that James Hardie must "fully fund" compensation for people who contracted lung diseases from contact with its products - now and into the future.
If James Hardie chooses to fight that through litigation, he said, governments should contest its moves in every court.
"We want James Hardie to come out of this but James Hardie is going to have to pay. Unions and victims will be relentless in pursuing James Hardie and if that means its share price has to fall by another 40 percent, then so be it," Bastian said.
"At the moment, they are spending $US1 million a month on legal fees to defend the indefensible. If they want their share price to improve there is only one way to do it - pay up and move on."
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