Veteran spinner sets out to defend James Hardie
It hasn’t taken new James Hardie chairman, Meredith Hellicar long to start “spinning”.

A former noted spinner herself years ago for unsuccessful Kiwi raider,
Chase Corporation, plus other roles where public relations was part of
the brief, Hellicar has started issuing her silky strands in a series
of media interviews yesterday.

And on the ABC’s AM program today, reported on the SMH website here – Don’t forget our shareholders: James Hardie chair

And this is what redoubtable Herald reporter, Liz Sexton reported yesterday – Hardie chief says board must stay

Liz Sexton, along with Ean Higgins at The Australian and a couple of reporters at the AFR Fiona
Buffini for one have done good work in covering the Special Commission
of Inquiry into the way James Hardie dealt with its asbestos
liabilities, principally between 2001 and 2003. But the Commission has
gone back further, to 1995 to the way the company’s affairs in their
entirety were conducted, especially allegations of the stripping of
assets from the companies which held the asbestos liabilities.

Those events from 1995 to 2001 could contain problems for the old Hardie board, which included Hellicar among others.

The headline on Ean Higgins’ story in today’s Australian newspaper sums up the Hardie attitude and that of Hellicar – Hardie ‘so sorry’, dry-eyed on claims

But the ABC interview this morning – New Hardie boss notes obligation to investors
– is probably the most offensive of the present charm campaign. By
harking back to the rights of shareholders she managed to raise the
spectre of the old corporate wriggle, ‘the real owners of the company’.

“The fact of the matter is we can’t wish away our legal and fiduciary
responsibilities. As much as we would like to, in many respects, at the
end of the day we’re custodians on behalf of the shareholders. We have
obligations to our shareholders. I think that perhaps that’s been
forgotten in all of this.”

Well Ms Hellicar, if the board and management, and that includes you,
had have acted with more responsibility back in 2001 and earlier,
Hardie would not be in the predicament it now finds itself. You
owed a responsibility to shareholders, employees and everyone else then
to act in the most fiduciary way. That doesn’t mean just doing
something to improve shareholder returns to the exclusion of everyone

In the announcement of 2001about the restructuring and the move of
domicile to the Netherlands, great play was made of the way the move to
The Netherlands would mean $30 million or so a year more in after tax

“This new structure will increase the group’s after tax profit by about
$30 million a year compared to the present structure, all things being
equal” The company said the tax rate for the new company would be in
the range 25% to 30% compared to the existing level of 40% to 50%.

And yes that tax rate was certainly a hefty cost and onerous. But so to
is the billion dollars or more than they company is now going to be
paying out, so long as it doesn’t try and slither or spin its way out
of its responsibilities.

NOT separating the asbestos liabilities from the company in 2001 and
sliding off to the Netherlands would have been a far cheaper option.
And this IS NOT hindsight speaking. It is merely a justifiable

No one in the board or in management or in the advisers asked the question, what happens if we do nothing?

Yes lower profits and higher tax, but what happens to those asbestos liabilities?

Quite clearly the company never thought to ask that question,
especially directors, Ms Hellicar included, who had a fiduciary
responsibility to shareholders.

This is a clear example that doing the right thing, and appearing to do
the right thing, had a strong financial benefit to Hardie that would
have been apparent back in 2001.

Yes it would have cost more money and yes it might have meant a lower
share price, bonuses for managers and rewards for shareholders, but
staying and facing up to the problem would have meant no Special
Commission of Inquiry, or the enormous damage to the reputation of the
company, the board and managers.

Its quite likely the financial costs would have been more containable
and the company would not have lost touch with how public unease was
slowly growing about its actions.

Despite the weavings of the new chairman, it will be Mr Jackson QC and
then the NSW Government who will determine just what happens to Hardie.

A special act of parliament to hold Hardie now and in the future, to
its responsibilities, would be an interesting course for Carr to go.

And, by the way have Stephen Loosley and Labor Party affiliated
lobbyists, Hawker Britten, thought about returning the thousands of
dollars they took from Hardie to lobby then soft NSW Government into
doing nothing back in 2001?

Haven’t heard any on the union side or the lawyers asking that
question, have we? Iron Mark Latham forced the return of the $74,000 in
Hardie donations last week to the asbestos victims group.

What about Mr Loosley (who received $50,000 from Hardie), the former
ALP Senator from NSW, News Ltd spear carrier in rugby league, political
commentator and former heavy of the NSW Right. And Hawker Britten, with
those principals and staff so close to Bob Carr and members of the NSW

Peter Fray

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Peter Fray
Editor-in-chief of Crikey

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