Back when James Hardie Ltd
was selling the idea of moving its headquarters to the Netherlands, the
company claimed it was all about tax effectiveness. During the Jackson
inquiry, it became evident it also was an attempt to put the width of
the globe between its profits and its asbestos victims. Now it looks
like James Hardie isn’t succeeding in tax avoidance either.

Hardie yesterday announced that the ATO wants at least $222.5 million in back tax and penalties, which took a few percent off the share price. Ean Higgins in the Oz boosts
the sum at stake to a hefty $500 million thanks to ATO interest charges
of 13% a year on the alleged capital gains tax swifty pulled during its
1998-99 move to the Netherlands.

James Hardie of course says
it will dispute the assessment and vigorously defend its position etc,
but the interesting thing about this latest problem for the building
products firm is that it’s another indication of the company’s
questionable culture. As Higgins reports:

It is the latest in a string of tax manoeuvres which have
gone bad for Hardie. It lost $120 million after being sued over a tax
dodge in the Channel Islands in the late 1980s and has so far been
forced to pay $US3.9 million in back taxes to the US Internal Revenue
Service, which is still investigating the company.

Does
anyone see a pattern in the way James Hardie has been behaving all
these years? Corporations tend to replicate themselves, and a culture,
once embedded, is very hard to change. It’s not hard to imagine that
the sort of culture that initially ignored the science about the lethal
nature of asbestos would also be a most unwilling tax payer and, as
recently as its last annual report, would happily try to re-write
history to its own spin.

The irony is that Hardie’s original
public justification for going Dutch also is disappearing as the tax
loop hole they were exploiting there to minimise tax on US income isn’t
what it used to be. I suspect no-one outside the boardroom will shed a
tear.

Peter Fray

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