Apr 24, 2009

James Hardie is just the tip of the iceberg

Amid the James Hardie "fully funded" furphy, it's becoming increasingly difficult to trust what companies say at all.

Adam Schwab — Business director and commentator

Adam Schwab

Business director and commentator

A former derivatives trader and long-time sharemarket investor told this writer yesterday that he didn’t bother with fundamental analysis anymore because he simply couldn’t trust was companies said. Instead, the investor said he now preferred to predominantly rely on technical analysis (or trends) to determine his trades, especially with regard to “short selling”. A few hours later, it was reported that NSW Supreme Court Justice, Ian Gzell, ruled that seven James Hardie non-executive directors and three executives had committed misleading and deceptive conduct in relation to a February 2001 press release. The release had claimed that a fund setup to meet potential asbestos liabilities was “fully funded” (it ended up being $1.3 billion short).

While the actions of former chairperson, Meredith Hellicar, and the remaining directors are without excuse (Hellicar, a former CEO of law firm Corrs Chambers Westgarth, was dubbed an “inaccurate” and “most unsatisfactory” witness), their conduct has not occurred in a corporate vacuum. There are numerous other former high flying corporate directors who presided over corporate collapses in which shareholders were fed constant misinformation but who have so far escaped any sanction whatsoever.

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