Australia builder in asbestos row

Building firms have seen boom times in Australia

Australian builders James Hardie Industries misled the public when it said it had set aside enough money to meet asbestos claims, an inquiry found.

The firm set up a 293m Australian dollar (US$205m; £115m) fund in 2001.

But the New South Wales government's inquiry found the fund should have been up to seven times bigger.

The firm's conduct was "misleading and deceptive" and its claim that the fund was sufficient was "without qualification", the inquiry said.

Chief executive Peter Macdonald and chief financial officer Peter Shafron also came in for criticism from David Jackson, the commissioner of the inquiry.

The company's statement to the Australian Stock Exchange on 16 February, 2001 that its foundation was fully funded was "misleading and deceptive," Mr Jackson said.

"In my view, they breached their duties as officers of James Hardie," Mr Jackson said - although he did not recommend that either face charges.

The Australian Securities and Investment Commission will now read the report and decide whether it wants to level charges against James Hardie or its management.

The company said it would comment later once it had analysed the two-volume, 576-page report.

New business

The company - whose shares were suspended at its own request - has said it will meet all compensation claims, and could ask shareholders for more money to do so.

James Hardie Industries still has in its pockets the profits made by dealing in asbestos David Jackson, inquiry head

Its business now concentrates on home sidings in the US, which contribute 80% of its $1bn yearly sales.

Unions said the company's bosses should resign.

"I think Mr Macdonald should do the decent thing," said Greg Combet, president of the Australian Council of Trade Unions.

High exposure

Australia has one of the world's highest rates of mesothelioma, a deadly lung disease caused by long-term exposure to asbestos.

Like many firms, units of James Hardie used to use the substance extensively in insulation.

Australia banned asbestos in 1984, and none of the subsidiaries which used it still exist.

But James Hardie was still responsible for compensation, setting up the fund the same year it moved its headquarters to the Netherlands - ostensibly for tax reasons.

The company had relied on a consultancy report, which proved to be faulty, to support its estimate of compensation requirements.

"I find it difficult to accept that management could really have believed that the funds... would have been sufficient to enable it to pay all future legitimate asbestos-related claims," Mr Jackson wrote.

"To put it directly, James Hardie Industries still has in its pockets the profits made by dealing in asbestos, and those profits are large enough to satisfy most, perhaps all, of the claims of victims."

In the year to March 2004, James Hardie made a net profit of US$130m.