$4 million cost and warning on ‘adverse impact’ in Australia from CEO
That playful David Jackson QC is at it again, producing a word, or a
question or comment that cuts straight to the heart of James Hardie’s
behaviour in the way it avoided its asbestos-related liabilities, a
subject being probed by the Special Commission of Inquiry headed up by
the aforesaid Queens Counsel.

Last week he used the word “shabby” in posing questions about how he
might describe Hardie’s conduct if he found what they had done was
strictly legal. See Crikey’s previous story on the subject
– Asbestos poisoning: a “shabby thing”

On Monday Jackson posed the question that the news release announcing
the move by James Hardie to establish the charitable trust to handle
the asbestos related claims had sufficient funds to meet future claims,
was “arguably misleading”.

Jackson said the statement gave the impression that Hardie had received
advice from two outside experts, PricewaterhouseCoopers and Access
Economics about how much the trust might earn.

Hardie’s counsel, Tony Meagher SC, that agreed that no independent
experts looked at the earnings rate, but added that the news release
had not said this was the case. (Greg Baxter, now chief flack at News
Ltd, was in charge of Hardie’s public relations back in 2001 and has
already been mentioned a number of times in the Commission).

This release is important because it is subject is the most serious
allegation made against Hardie CEO, Peter Macdonald (which Tuesday
released a statement on the company’s solid first quarter earnings, but
more of that shortly). Counsel assisting the Commission, John Sheahan
has claimed Macdonald was liable for prosecution under the Corporations
Act because the release was sent to the ASX.

This is how the matter was reported in Tuesday’s SMH – Hardie case turns on phrasing

The release, dated February 16, 2001, said: “In establishing the
foundation, James Hardie sought expert advice from a number of firms,
including PricewaterhouseCoopers, Access Economics and the actuarial
firm, Trowbridge. With this advice, supplementing the company’s long
experience in the area of asbestos, the directors of [James Hardie]
determined the level of funding required by the foundation.”

Jackson, who is investigating a shortfall in the trust put at up to $2
billion, said yesterday this was “arguably misleading by omission …
of the limited roles” played by PricewaterhouseCoopers and Access.

Crikey went looking for the above release, but despite finding references to in a number of statements on February 16, 2001, (here)
the actual statement was not to be found at the Hardie website.
Strange. Greg Baxter’s name is on the above release, which
indicates how intimately involved he was with the releases.

Today it was news by media release
again, with Peter Macdonald revealed a solid first quarter with
earnings from continuing operations up 13 per cent to $US 37.1
million. There was a small mention made of the inquiry with the
following warning, “Negative sentiment associated with the Special
Commission of Inquiry could have an adverse impact on Australian
sales.”

Already there are a number calls for boycotts, or small scale boycotts
in place, but the Australian business is now a small proportion of
Hardie’s world wide sales and earnings, the company will not feel very
much. But no mention of course of any wider impact from the
Commission’s findings which are still due to be handed to the NSW
Government on September 21.

Hardie did put costs estimated for the company at the Commission at $4
million, which would be more gravy for Allens, themselves under
examination for their work in advising Hardie during the setting up of
the Trust and the restructure and move of domicile to the Netherlands
in 2001.

Already in the past week we have two instances of the Commissioner
choosing to use quite emotional and loaded worlds to describe Hardie’s
behaviour. His report won’t be nice for some.