How a devastating inquiry brought a firm to order
Sydney Morning Herald August 14 2004
By Elisabeth Sexton
Over four months of public hearings, David Jackson's devastating examination of the conduct and culture of James Hardie Industries produced some extraordinary moments of courtroom drama.
He listened impassively as witnesses conceded to misleading asbestos victims, the NSW Government, the Supreme Court and the stock exchange.
But the biggest revelation came just half an hour before the QC retired to begin writing the report due on September 21.
James Hardie's barrister, Tony Meagher, SC, must have known his client had one last chance to influence the outcome, and it needed to be good.
Mr Jackson, 63, a specialist in High Court appeals, had driven the inquiry with energy and an unblinking response to the company's impressive legal firepower.
Yesterday Mr Meagher said his client offered an open-ended sum to compensate everyone who developed asbestos diseases from the group's products.
Some conditions are attached to how each case will be decided. But for the first time the offer is politically acceptable.
It would not be an understatement to say the company was drawn kicking and screaming to that point. Since setting up a charitable trust to handle asbestos compensation in February 2001 it has maintained that it had no obligation to meet asbestos claims. On the contrary, directors had a duty not to "give away" shareholders' money if there was no legal call to do so.
The first crack appeared in May when James Hardie cancelled a dividend to distribute proceeds of the sale of a US business. It would be "inappropriate to proceed with a return of capital to shareholders" while the inquiry was under way, said the chief executive, Peter Macdonald.
However, the decision on dealing with the surplus cash was merely "deferred until later in the year".
In June shareholders were warned that the outcome of the inquiry might involve "material costs" from lawsuits against the company.
The first, vague, offer to contribute shareholder funds to asbestos victims came on July 14. Version two was put on the table on Thursday. The fact that the decisive rendition came as a cliffhanger finale to the public hearings reflects how much credit for the turnaround must go to Mr Jackson.
Unions and asbestos groups have been fulminating against James Hardie since the trust was set up in 2001. The ammunition they needed to get their campaign on the national political agenda was provided by the painstaking work done by Mr Jackson and the team of investigators led by counsel assisting, John Sheahan, SC.
The company's bravado visibly withered as the weeks wore on.
Mr Jackson yesterday acknowledged that James Hardie's series of offers had been roundly criticised.
"But if one casts one's mind back to the commencement of the inquiry, the possibility then of their being made would have seemed remote."