Mesothelioma lawsuits
The James Hardie case has once again brought into the limelight the plight of mesothelioma victims and it is with a fair amount of repugnance that I bring this to light.
How the mesothelioma and asbestos problem all started
The Hardie Group had been manufacturing asbestos products (mainly in brake linings, cement, piping and insulation products) for over 70 years in Australia and their products had been widely used. Because asbestosis and mesothelioma takes such a long time to develop, attempts to pre-empt the amount of funds required for compensation claims is impossible to estimate. Asbestos related claims were not restricted to just the factories and miners that were involved but has broadened over the years to include power station workers and members of the naval forces. Between 1937 and 1986, the asbestos products were manufactured by the subsidiaries of James Hardie Industries Ltd - these 2 are now better known as Amaca and Amaba. Whilst the Hardie group was not alone in its legal liabilities relating to asbestos and mesothelioma claims (CSR, BHP Billiton were also facing lawsuits of their own), it was the way the company dealt with the problem that has caused public outrage.
How James Hardie dealt with the impending mesothelioma lawsuits
This is where the dirty comes in. Beginning from as early on as 1996, James Hardie started to transfer assets from Amaca and Amaba to James Hardie Industries Ltd and then over to another company James Hardie Industries NV. By early 2001, the ownership of Amaca and Amaba was then moved to another company - the Medical Research and Compensation Foundation and left this Foundation with just under $300 million to fund the asbestos claims. In addition to this, James Hardie assured the Supreme Court of NSW that in an event of a shortfall, it could use the $1.9 billion owed by their Netherlands company in partially paid shares to deal with mesothelioma or asbestos related claims. This assurance was the deciding factor which paved the way for the ultimate transfer of assets from the parent company James Hardie in Australia to their company in the Netherlands.
In a nutshell :
- 1996 - James Hardies transfers assets from Amaca and Amaba to their Netherlands based company.
- early 2001 - Amaca and Amaba were dissolved and ownership was then transferred to the Medical Research and Compensation Foundation (with $300 million in funds for mesothelioma and asbestos claims)
- late 2001 - James Hardie Industries Ltd assures the Supreme Court that it could call on the $1.9 billion in partly paid shares by their Netherlands based company to fund any shortfall. The Supreme Court approves of the final transfer of assets from James Hardie in Australia to their company in the Netherlands.
- Now comes the real dirty, in March 2003, unbeknownst to the Supreme court of the Australian stock exchange, James Hardie cancelled all the partly paid shares thereby negating the $1.9 billion promised to asbestos and mesothelioma claim victims. So in effect, what James Hardie had done was to remove all their assets overseas which meant that now the asbestos and mesothelioma claims' victims (even if they did have lawsuits against the parent company) are left with no means to access those assets.
The mesothelioma lawsuits and asbestos claims fiasco today
The Medical Research and Compensation Foundation had already pre-empted that a serious shortfall would be in the making as early on as December 2003. When this was highlighted to the government, David Jackson QC was appointed to investigate. Just to give you an idea of how far short the funding was - in July 2004, the estimate for the total mesothelioma and asbestos claims against James Hardie would stand at $2.2 billion.
The lawsuit has since resulted in a deadlock. James Hardie Netherlands has offered compensatory amounts (unspecified as to how much) IF the Australian government establishes a statutory compensation scheme. The government has flatly refused stating that it would inevitably involve a cap in the amount of compensation that asbestos and mesothelioma victims would receive. A statutory scheme would in effect also take the lawyers out of the equation thereby reducing the legal fees required to run the compensation scheme.
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Mesothelioma lawsuits
