Killed by Asbestos

The compensation scheme will see Hardie inject multi millions
into the Foundation it set up to finance claims, followed by annual funding
of around $70 million to meet ongoing claims. Funding would be capped at around
30 per cent of the multi-nationals cash flow, but any shortfall would be safeguarded
by the board having the capacity to borrow against future earnings.

This would provide a multi million-dollar buffer against any unexpected blowout
in claims in the early years of the scheme.

The union campaign, voted the most successful for 2004 at the ACTU Union Awards
night, saw unions mobilise workers nationally and internationally in the major
cities as well as outside the James Hardie Head Office in California and the
James Hardie AGM in Amsterdam on September 17.

Unions held a vigil outside the company’s Sydney AGM and the James Hardie
factory at Rose Hill, NSW.

It was by far the most reported union media campaign of 2004, making headlines
almost daily.

James Hardie profits slumped, showing the boycotts were hurting the company
and forcing it to the negotiating table. On November 23 James Hardie admitted
that council and state government boycotts were affecting profits and publicity
over the asbestos scandal was encouraging more people to make claims. It outraged
the public after admitting its former boss Peter Macdonald would receive a fortune
despite an official finding he could have criminally misled investors. The company
now also wears the dubious honour of becoming the only Australian business to
be dumped from an influential index of companies with sound social and environmental
practices. Then on December 6 the Australian consumer watchdog, The Australian
Competition and Consumer Commission, announced it would take James Hardie Industries
to court seeking restoration of up to $2 billion for asbestos disease victims
unless the company agreed to a full settlement in negotiations with the ACTU.

A breakthrough in talks came as the beleaguered Medical Research and Compensation
Foundation, a former Hardie subsidiary, forced the issue by applying for provisional
liquidation. The combined pressure on Hardie shamed a company subsidiary into
agreeing to pay $88 million to fund compensation claims and keep the Foundation
afloat while talks continued. The 11th hour no strings attached payment prevented
payments to hundreds of victims becoming frozen. The Foundation said its threat
to go into provisional liquidation forced Hardie to drop its long-standing refusal
to pay any money without guarantees it would not be sued.

James Hardie and the unions told the NSW Supreme Court that agreement to resolve
the funds $1.5 billion shortfall would be reached and the court adjourned until
January 31.

Hardie's shares, which had slumped during the campaign, rose tentatively as
news of the pre-Christmas settlement reached the media.

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