The James Hardie asbestos issue is hotting up again and here is some of our recent sealed section material on the issue which was emailed to Crikey subscribers.
Peter Macdonald under the pump
June 4 sealed section
The Special Commission of inquiry into the setting up of a foundation by James Hardie to house its asbestos-related liabilities is on its last legs with Hardie CEO Peter Macdonald giving evidence this week.
And at times he was a feisty chap, engaging in some spirited verbal jousts with counsel for the Foundation, Michael Slattery QC. That led the Commissioner, David Jackson QC to remark that he would be ‘very surprised’ if Hardie Counsel, Tony Meagher SC was representing the company for free.
“One of the reasons why you pay him a significant amount is so that when the time comes to argue the case, he will do it for you,” Mr Jackson told Macdonald, who was in the witnesses box.
“It really doesn’t help your case for you to take his role and I would be obliged if you would answer the questions that are put to you.”
Jackson further advised Macdonald that he should not feel obligated to “counter-punch”, and he shouldn’t weaken and be tempted “to answer a different question from the one that’s put to you”.
Now that’s a pretty straight piece of advice. From newspaper reports it was a series of fairly robust exchanges between Slattery and Macdonald.
The Hardie boss also told the Commission that the then deputy managing director of CSR, Alec Brennan had expressed concern that his company might be left “holding the baby for asbestos costs” after Hardie revealed plans to set up the trust and move its domicile to Amsterdam.
Mr Macdonald said he had told Mr Brennan, who is now CEO of CSR, that there were no grounds for concern. He said he told Brennan that the financial position of the former Australian parent company would be ‘preserved’ by an issue of partly paid shares.
The inquiry has been told that the partly paids entitled the Australian rump of Hardie, left behind in the shift of domicile, to make a call on the new Dutch company in the event of the Australian company being unable to meet its debts. The value of the call was linked to the market capitalisation of Hardie at the time of the shift of $1.9 billion.
It has also emerged during the inquiry that these partly-paid shares were cancelled by Hardie without any announcement in March 2003, without telling the ASX or the NSW Supreme Court which approved the shift in domicile, including the partly paid shares.
A spokesman for CSR said outside the inquiry that the first they knew of the cancellation of the partly paid shares, which were used to reassure Mr Brennan in 2001, was when it revealed in the Commission last month.
Now there’s a tantalising sign of some future discussions between CSR and Hardie about disclosure, information flow and the like.
Crikey wonders if Peter Macdonald will be counter-punching as robustly in any discussion with Alec Brennan after the inquiry has finished as he did in the Commission this week.
There’s a feeling that CSR is ‘not happy Peter’ about Hardie’s actions.
Stephen Loosley – the battler’s friend
June 1 sealed section
There is something about figures from the NSW Labor Right that is different from the rest of Australia. The pragmatism and self-interest seems to know no bounds. Before we even launched Crikey, a prominent NSW Right figure wanted to invest $50,000 for 5 per cent. This was the peak of the Dot Com boom afterall.
And so it seems with former Senator and NSW ALP general secretary Stephen Loosley who collected almost $50,000 for his Big Four accounting firm PwC for advice on one of the most cynical corporate restructurings we can recall.
The James Hardie asbestos dodge stinks to high heaven and it amazing to think that Labor bruvvas such as Loosley and those charmers from Hawker-Britton were so happy to take the Hardie coin to shaft unions and future claimants poisoned by the James Hardie asbestos.
Loosley has a penchant for charging big fees to help huge and usually controversial companies. He sits on the NRL board as one of News Ltd’s representatives and has also done plenty of trouble-shooting for Frank Lowy’s “whatever it takes” Westfield shopping centre empire.
James Hardie and News Ltd spin
May 14 sealed section
Marcus Priest had a very interesting feature in The Weekend Fin about the James Hardie spin strategy surrounding its departure from Australia and those pesky asbestos liabilities.
The crisis for the company comes at a very interesting time for its departing spin doctor Greg Baxter, who resigned in March and is due to take over as News Ltd’s main Australian spindoctor in June.
Crikey broke the story of Baxter’s hiring by News and we understand that he agreed to stay on until the end of May to help James Hardie through its controversial NSW commission of inquiry.
The Fairfax press have certainly run with the Hardies story harder than News Ltd so it would be interesting to know how Baxter is dealing with News Ltd journalists when he’ll soon become a senior executive inside the company. It certainly didn’t hold The Australian’s Margin Call columnist Michael West back when he wrote this recent column getting stuck into Baxter and his current employer.
News Ltd only started sending a reporter to cover the inquiry last week. From what Crikey has read, James Hardie has behaved disgracefully and should be forced to stump up another $500 million to ensure there is enough cash to pay to their hundreds of dead and dying asbestos victims from over the years.
Check out last week’s analysis of the James Hardie situation on the site here: http://www.crikey.com.au/business/2004/05/14-0006.html
The James Hardie departure to Holland
May 14 sealed section
When James Hardie Industries shareholders voted to move the company to the Netherlands back in late 2001, a major concern was tax. Australian tax. So it comes as something of a surprise that one of the reasons advanced three years later for a capital return was a new Dutch tax. What? What’s going on here?
CEO Peter Macdonald said in a statement that Dutch authorities had recently ruled that a 10% withholding tax was to be paid on future capital reductions. Hardie was planning a return of up to $200 million paid for from the proceeds of the sale of its gypsum business.
Moving to Holland was going to solve James Hardie’s tax woes. It hasn’t. And those asbestos nasties in Australia keep creating bad news. Someone has mucked things up, as Jimmy Hardy explains on the site here: