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2009/16: Compensation for asbestos victims: were the penalties imposed on James Hardie directors adequate?<BR>

2009/16: Compensation for asbestos victims: were the penalties imposed on James Hardie directors adequate?

What they said...
The penalties and bans handed down to former James Hardie executives and directors today are not enough considering the extent of their immoral and illegal behavior and the harm the company's deadly asbestos products have caused'
The Australian Council of Trade Unions

'The decision is another important step in improving corporate governance in Australia and that improvement will add confidence to the integrity of our markets'
Tony D'Aloisio, the chairperson of the Australian Securities Investments Commission (ASIC)

The issue at a glance
On August 20, 2009, NSW Supreme Court judge Ian Gzell A judge handed out fines of up to $350,000 to ten former executives and directors of the building products maker James Hardie.
Judge Ian Gzell also disqualified former chief executive Peter Macdonald from managing a company for 15 years, former James Hardie lawyer Peter Shafron for seven years and former directors Meredith Hellicar, Michael Brown, Michael Gillfillan, Martin Koffel, Dan O'Brien, Greg Terry and Peter Willcox for five years each.
The penalties were not uniformly well-accepted. While they were not as high as the corporate regulator (ASIC) had wanted, some spokespeople for the corporate sector feared that they would discourage necessary risk-taking and required an unreasonable degree of responsibility upon a set of non-executive directs.

Background
(The following is a significantly edited version of the Wikipedia's entry titled 'James Hardie'. The full text of this entry can be found at http://en.wikipedia.org/wiki/James_Hardie)

Industries Ltd. is an industrial building materials company headquartered in the Netherlands and listed on the Australian Securities Exchange which specialises in fibre cement products.
For much of the 20th Century James Hardie was involved in the manufacture, distribution and mining of asbestos and its related products such as building products, insulation, pipes and brake linings. In Australia, there were asbestos plants in New South Wales, South Australia, Victoria, Queensland and Western Australia. Many of these products - including the building material known as 'Fibro' - resulted in people developing asbestosis and mesothelioma.
The Australian Council of Trade Unions estimated that 4,600 claims for mesothelioma would be made against James Hardie from 2006 onwards, with claims expected to peak in 2010 or 2011 with 250 claims per year. The total amount of past and future claims made against James Hardie for asbestos-related diseases is estimated to be more than 12,500 of which 8,103 will be claimed after 2006.
James Hardie and its subsidiaries had been providing compensation for victims of its operations since the 1980s. There were some claims prior to this, but the proliferation of cases from the 1980s onwards saw James Hardie acknowledge that asbestos was known to be dangerous though the company claimed it had done everything possible to protect workers.
James Hardie had been structured as a parent company operating through subsidiaries since the 1930s. All asbestos operations, including the provision of compensation, were undertaken by James Hardie's subsidiaries, principally James Hardie and Coy and Hardie-Ferodo (later known as Jsekarb). Between 1995 and 2000, James Hardie (the parent company) began to remove the assets of these subsidiaries (since renamed Amaca and Amaba respectively) whilst leaving them with most of the asbestos liabilities of the James Hardie group [14]. In 2001 these two companies were separated from James Hardie and acquired by the Medical Research and Compensation Foundation (MRCF) which was essentially to act as an administrator for Hardie's asbestos liabilities.
Then CEO of James Hardie, Peter McDonald, made public announcements emphasising that the MRCF had sufficient funds to meet all future claims and that James Hardie would not give it any further substantial funds. Indeed, the net assets of the MRCF were AU$293 million, mostly in real estate and loans, and exceeded the 'best estimate' of $286 million in liabilities which had been estimated in an actuarial report commissioned by James Hardie.
After this separation, James Hardie moved offshore to the Netherlands for what it claimed were significant tax advantages for the company and its shareholders. To make this move, the company had to assure Australian courts (as it was listed on the Australian Stock Exchange) that the MRCF would be able to meet future liabilities. The courts were assured of this and that more money would be made available to its Australian asbestos victims it it were needed.
Shortly after, an actuarial report found that James Hardie asbestos liabilities were likely to reach AU$574.3 million. The MRCF sought extra funding from James Hardie and was offered AU$18 million in assets, an offer which the MRCF rejected. The estimate of asbestos liabilities was promptly revised to AU$751.8 million in 2002 and then AU$1.573 billion in 2003. In discussing the shortfall with the MRCF, James Hardie refused to accept further responsibility for the liabilities on the basis that the MRCF and James Hardie were separate legal entities.
On 12 February a judicial inquiry in New South Wales was commissioned by the NSW government. The findings were very critical of James Hardie and its management. Amongst other findings, it found that the actuarial reports commissioned by James Hardie which estimated liabilities at AU$286 million were inadequate because they used a financial model which made unfounded predictions on the value of investments held by Amaca and Amaba, the figures were subject to numerous unspecified conditions and they did not account for the effect of separating Amaca and Amaba from James Hardie.
However, the inquiry found that James Hardie was under no legal obligation to provide compensation. Despite this finding, there was immense political and social pressure on James Hardie to negotiate a compensation deal; governments were boycotting James Hardie products and unions were threatening to instigate a global union movement against the company based on a black ban of James Hardie products.
Subsequent to the inquiry in 2004, prosecutors brought civil and charges against the C.E.O. and other senior executives for making fraudulent statements as to the liquidity of the MRCF. In February 2007 every member of the 2001 board and some members of senior management were charged by the Australian Securities and Investment Commission (ASIC) with a range of breaches of the Corporations Act 2001 (Cth) including breach of director's duties by failing to act with care and diligence.
In April 2009 these senior executives and directors were found guilty of making fraudulent statements and in August the fines and penalties to be imposed on these directors were brought down.

Immediate James Hardie timeline
1987 - James Hardie stops making asbestos products

2001 - In February, the separation of the company is approved

2001 - Company sets up original, underfunded, asbestos foundation

2003 - In October, the company announces the foundation is underfunded

2004 - Special commission of inquiry runs between February and September

2004 - The Commonwealth passes the James Hardie Act in December

2005 - The James Hardie board approves the funding arrangement in December

2007 - Shareholders approve the first payment into the new fund

2007 - ASIC starts civil proceedings against 10 former directors and managers

2007 - Bernie Banton dies from asbestos related disease on November 27

2009 - The civil hearings conclude on March 2, and the verdict handed down on April 23

Duties of a director
Under the Corporations Act directors must
* exercise their powers and duties with the care and diligence that a reasonable person would have which includes taking steps to ensure they are properly informed about the financial position of the company and ensuring the company doesn't trade if it is insolvent
* exercise their powers and duties in good faith in the best interests of the company and for a proper purpose
*ensure that they do not improperly use their position to gain an advantage for themselves or someone else, or to cause detriment to the company, and
*ensure that they do not improperly use information obtained through their position to gain an advantage for themselves or someone else, or to cause detriment to the company.

Importantly, as a director they need to be fully across the financial position of the company.
*As a director they have a "positive duty" to prevent the company trading while insolvent.
*ASIC expressly state that "an understanding of the financial position of their company only at the time they sign off on the yearly financial statements is insufficient."
*If the company is insolvent, their duties as a director expand to include the interests of the creditors, employees and other stakeholders.

Internet information
On June 3, 2009, corporate lawyers Corrs, Chambers and Westgarth published 'The James Hardie decision and its implications: A panel discussion. (Short opinion pieces from panel participants at a Corrs Chambers Westgarth panel discussion on 3 June 2009)'. Among other things the panel discussions define the former role of a non-executive company director and the additional level of responsibility now apparently expected of those in this role following the court decision finding the James Hardie directors guilty of fraudulent behaviour.
This is quite complex material, however, it repays careful reading as it suggests some of the messages the corporate world is likely to take away from this case.
The full text of the panel's opinions can be found at http://www.corrs.com.au/corrs/website/web.nsf/Content/Pub_James_Hardie_Decision_030609/$FILE/James%20Hardie%20Corrs%20Discussion.pdf

On August 20, 2009, the Australian Council of Trade Unions issued a media release claiming that the fines and penalties imposed on the James Hardie directors were inadequate. The full text of this release can be found at http://www.actu.asn.au/Media/Mediareleases/PenaltiesforexHardiedirectorsarenotenough.aspx

On August 20, 2009, Matt Peacock, a reporter for the ABC's 7.30 Report, posted an analysis of the treatment received by the Hardie directors titled, 'James Hardie fines 'a joke' The full text of the report can be found at http://www.abc.net.au/news/stories/2009/08/20/2662140.htm

On August 20, 2009, WAtoday published a news report which quoted ASIC claiming that the recent fines and penalties would send a valuable lesson to corporate Australia on the level of responsibility required of company directors. The full text of this report can be found at http://www.watoday.com.au/breaking-news-business/james-hardie-decision-important-asic-20090820-erq6.html

On August 21, 2009, the ABC News ran a report titled, 'James Hardie penalties 'not enough' This gave the views of a number of critics of the penalties recently imposed on the Hardie directors. The full text of the report can be found at http://abc.gov.au/news/stories/2009/08/21/2662598.htm

On August 21, 2009, Professor Ian Ramsay, suggested that there were loopholes in Australia's corporate law that would allow some of the recently banned directors to obtain corporate positions overseas. The full text of this position can be found at http://www.abc.net.au/news/stories/2009/08/21/2662932.htm

On August 21, 2009, Stephen Mayne, the editor of the online current affairs and business site, Crikey, wrote and opinion piece titled, 'Greg Baxter escapes the Hardie blame game'. The piece suggested there should be some penalty imposed on Hardie's deceased chairman, Greg Baxter. The full text of this piece can be found at http://www.crikey.com.au/2009/08/21/greg-baxter-escapes-the-hardie-blame-game/

Arguments suggesting the penalties were not adequate
1. The fines were not large enough
It has been claimed that the fines imposed on the directors are inadequate given the number of asbestos victims who might need to be compensated and the extent of their suffering.
Corporate law expert and head of the School of Law at the University of Western Sydney, Michael Adams, said he was surprised by the low ranging fines and disqualifications as he considered 'the many victims of asbestos diseases from JHI products may not feel very much satisfaction from these penalties today.'
The widow of asbestos victim Bernie Banton said that she was disappointed with the fines handed down to disgraced former James Hardie executives in the New South Wales Supreme Court. Karen Banton stated, 'Bernie would've liked to have seen the penalties a lot higher. These people are going to have to give account, one day, when they finish this life, for their actions.'
Australian Manufacturing Workers Union secretary Paul Bastian said the fines and disqualifications would have little impact on the former board members of James Hardie. Mr Bastian stated, 'I don't think it will have much impact on any of them.'
On August 20, 2009, the Australian Council of Trade Unions issued a media release commenting on the penalties imposed on the James Hardie directors. The release stated, 'The penalties and bans handed down to former James Hardie executives and directors today are not enough considering the extent of their immoral and illegal behavior and the harm the company's deadly asbestos products have caused.'
Gippsland's Asbestos Related Diseases Support Network (GARDS) has also indicated it is disappointed by the penalties handed down to former James Hardie executives.
The secretary of GARDS, Vicky Hamilton, has stated that the punishments do not go far enough.
Ms Hamilton stated, 'If the laws were any different, I'd like to see them go to jail quite frankly.
They knew what they were doing, they did the wrong thing, they were taking money away from sufferers, it was disgusting to see that happening and they thought they were going to get away with it.'
It has also been claimed that the fines are too small to have any effect on directors and executives as well remunerated as these men and women. ABC reporter Mark Peacock has stated, 'If you looks at someone like Meredith Hellicar, got a payout of over a million dollars when she left the company - has now got a fine of $30,000. That's a drop in the ocean.'
It has further been noted that the fines imposed do not even approximate those recommended by the Australian Securities Investments Commission (ASIC). ASIC had asked the court to disqualify former chief executive Mr Macdonald for up to 16 years and fine him between $1.47 million to $1.81 million. While Mr Macdonald was banned for fifteen years, the fine imposed on him was only $350,000.
Professor Michael Adams is Head of the School of Law at University of Western Sydney, and for 25 years has conducted research into corporate law in Australia, Europe, North America and Asia. After following the James Hardie case closely over the years, Professor Adams stated that the $80,000 fine imposed on James Hardie Industries for breaching corporations' law is comparable to a parking fine in terms of the company's size and ability to profit.

2. Some of the directors may avoid the fines and bans imposed on them
Former James Hardie directors and executives may escape personally paying any fines imposed yesterday for breaching their duties.
It has been suggested that some of the fines may be covered by an offshore James Hardie company and the executives and directors could also have their legal fees paid for them
ABC reporter, Nonee Walsh, has made the same point. She has stated, 'The fines and legal costs imposed on the former chief executive, Peter Macdonald, and board directors are likely to be covered under indemnity agreements with James Hardie, and by directors insurance.'
It is also likely that James Hardie will appeal the findings. James Hardie has spent $25 million so far fighting ASIC's case.
It also appears that some of the directors will be able to avoid paying their own legal fees and those of ASIC.
The Australian Corporations Act prohibits companies indemnifying directors and executives if they lose this type of civil penalty case. ASIC said in evidence to a Senate committee in 2007: 'It may be open for a company to loan or advance money to the former officer for use in defending the proceedings with the stipulation that the money must be repaid in the event that the officer is unsuccessful in his or her defence.' However, given that the former James Hardie directors and executives have lost the civil case, they would need to repay James Hardie's the cost of their legal representation.
Despite this, not all the directors will have to pay their own legal costs. Some of the former directors and executives have indemnities from foreign companies in the James Hardie group, which might allow them to claim that the prohibition does not apply to them. In this case they will not have to reimburse James Hardies for the money spent on their legal fees.
It has also been noted that many of the directors may be able to continue to work on boards, despite the bans, as these bans only apply within Australia.
Professor Ian Ramsay from Melbourne University says four former directors, including former chief executive Peter MacDonald, are based in the United States, meaning there is nothing stopping them from working for companies, including James Hardie, which are registered in other countries.

3. James Hardie's former chairman, Alan McGregor, died before his conduct could be investigated
It has been suggested that James Hardie's former chairman, Alan McGregor, had a large part to pay in the company attempting to side-step its financial obligations to asbestos victims. It has further been suggested that Mr McGregor's estate should not simply be allowed to benefit from his remuneration from James Hardie.
On August 21, 2009, Stephen Mayne, writing for the online business journal, Crickey, claimed, 'Alan McGregor's name has barely been mentioned in the media since he died of cancer in February 2005 but there is something wrong with his family still swanning around with an estimated $50 million...
When McGregor died, his 8.6 million James Hardie shares were worth almost $60 million. As chairman of the company, he could have snuffed out the whole sordid exercise but instead he conducted a rather large orchestra of co-offenders and had a huge financial incentive to do so.'
Mr McGregor's departure, due to ill-health, coincided with the news that a special enforcement team at the Australian Securities and Investments Commission was to investigate the company over allegations aired at a New South Wales inquiry about the foundation James Hardie set up to pay asbestos claims.
Corporate lawyer for James Hardie, Peter Cameron, also died prior to the completion of the investigation into Hardie's compensation provisions for asbestos victims.
Particularly in the case of Alan McGregor, Stephen Mayne has suggested that the estates of those who have been found guilty of improper corporate conduct should be penalised.

4. The penalties will not act a sufficient disincentive to other directors
It has been suggested that penalties such as those imposed on the James Hardie directors are not sufficiently large to act as a disincentive to other company directors. According to this line of argument, many board directors receive such large salaries that there would have to be significant penalties imposed to prevent some of them boosting their salary and share packages by taking actions that are of doubtful propriety.
While still a part-time role, non-executive directors are receiving increasingly large compensation for their expertise and time. Elizabeth Nosworthy served as a director of Babcock & Brown, Venerator, Commander Communications and GPT. Despite BNB, Ventracor and Commander collapsing last year and GPT shares falling by more than 90%, Nosworthy collected more than $640,000 in directors' fees in 2007 - equivalent to more than 11 times the average Australian weekly wage.
Professor Michael Adams is Head of the School of Law at University of Western Sydney, and for 25 years has conducted research into corporate law in Australia, Europe, North America and Asia. After following the James Hardie case closely over the years, Professor Adams stated that unfortunately, penalties like the ones imposed on the James Hardie directors and executives do not act as a deterrent for poor corporate governance or corporate social responsibility practices.

5. Australian courts seem to treat those who commit corporate offences as less blameworthy
It has been suggested that Australian courts treat corporate misconduct as in some way less serious than other crimes.
This point has been made by Professor Mark Findlay, director of the Institute of Criminology at the University of Sydney, who has stated, 'Courts in Australia seem to deal with corporate crime in an unusually lenient fashion, relative to what courts do in other countries and certainly relative to the way in which we punish an individual for doing what the directors or the company have done in this case.'
Professor Findlay has gone on to claim, 'I think the issue is that we need to start thinking more creatively about the sorts of punishments we impose, because relatively small fines and bans from sitting on company boards for people who have lots of money doesn't really have an enormous impact. So I think we need to start thinking ... [about] punishments on companies that really hurt.'
There are those who have called for criminal sanctions for corporate negligence and other corporate actions placing workers and the community at risk.
Independent senator Nick Xenophon has claimed that the penalties handed out to James Hardie executives do not go far enough. Senator Xenophon has called for uniform industrial manslaughter laws to be introduced.
Senator Xenophon said there needed to be tougher sanctions and jail terms should be introduced for company directors who endanger the lives of employees.
Senator Xenophon stated, ''This corporate restructuring was about avoiding their financial liabilities in terms of an asbestos compensation fund.
It would not have come to this if we had industrial manslaughter rules in place where company directors would be jailed for peddling a dangerous product that could kill or maim people.'

Arguments suggesting the penalties were adequate
1. The fines are in accord with those generally imposed
It has been claimed that the penalties are generally in accord with those imposed on executive officers and directors who are found guilty of serious misconduct.
Macdonald's penalty reflects the fact that he was found to have breached ten provisions of the Corporations Act - with his 15 year disqualification period in a similar range to Ray Williams and Rodney Adler in the HIH Insurance case, where the directors concerned were found to have similarly breached the Act.
There are those who suggest that as the James Hardie directors were not seeking their own financial advantage, the penalties imposed upon them appear quite harsh.
The case has been compared to that of Steve Vizard, who as a Telstra director, was found guilty of using insider information when making investments. He received a shorter ban and an only slightly larger fine than .
James Frost, deputy commentary editor for Business Spectator and the author of Online Share Investing for Dummies, has stated, 'Those among us with longer memories will remember the case of former Telstra director Steve Vizard who was found to have used confidential and information to trade shares in a number of technology companies ahead of official announcements from the company. While Vizard ultimately lost money on the trades, he was banned from running a company for ten years and fined $390,000.'

2. The bans will end the corporate careers of most of the former James Hardie directors
Even if the bans were ultimately overturned, it has been claimed they have damaged the credibility of the directors to such an extent as to have effectively ended their corporate careers.
As an instance of this, even prior to the adverse finding against her, former James Hardie executive Meredith Hellicar stood down from her role as a non-executive director at financial services giant AMP. In April, 2009, AMP announced that Ms Hellicar, who was appointed to the company's board in 2003, would not run for re-election at the company's annual general meeting in May.
Similarly, Pru Bennett from the corporate governance advisory firm Regnan noted that former James Hardie director, Peter Willcox would be unlikely to retain the confidence of the shareholders of any subsequent company of which he was a director.
'It is interesting to note that it is likely that he will be facing re-election at the 2009 Telstra Annual General Meeting,' she said. 'Given the voting levels of the recent RIO AGM against a number of non-executive directors there, it is likely that they will be voting against Peter Willcox at that annual general meeting.'
Independent telecommunications analyst Paul Budde has stated, 'What Telstra now needs is somebody who is not controversial. Somebody who is not tainted and can step in and talk to the Government without ... the Government [being] embarrassed by all sorts of media questions about Peter Willcox's activities in Hardies. So I think that it doesn't make sense for the Telstra board to look at a person that might result in asking questions.'
It has been claimed that the damage done to these directors is so great that in or outside Australia they are now virtually unemployable. No company would want the bad publicity which must inevitably come from having any of these men and women sitting on the Board.
Professor Ian Ramsay from Melbourne University has stated, It may be technically possible for these people to work for James Hardie because it isn't an Australian company.
However, I would have thought there's no prospect of that occurring in reality because of the extraordinary public condemnation that would unfold.'

3. The penalties punish individuals who should not have been held responsible for approving the media release and others who were not there when the release was approved
It has been claimed that the fines and bans are very harsh as they are being imposed on non-executive directors.
Non-executive directors generally have the responsibility to guide and monitor the management of the company, rather than to be involved in the operational responsibility of the company. The non-executive directors claimed that the approval of the media release should not have fallen to them as it was more properly an operational responsibility. Aspects of companies' business that refer to matters of transparency and disclosure are generally regarded as operational matters. Thus the accused directors had claimed that the responsibility for the decision should not rest with them.
Five of the non-executive directors chose challenged the accuracy of the Board minutes which stated that the announcement had been approved. Further two of the non-executive directors were based in the United States and had not seen the draft announcement.
Another member of the board has also argued that as he was not experienced in public relations, he was entitled to leave the decision on the approval of public statements to those in a better position to decide its appropriateness.
James Frost on has SBS World News Australia blog has stated, 'Two of the directors, Michael Gillfillan and Martin Koffel, were overseas at the time of the infamous board meeting and have proved that the release was never sent to them. And yet the judge didn't differentiate between any of the non-executive directors, banning each of them from running a company for five years and fining them $30,000. Gillfillan, Koffel, Helicar and a third director, Michael Brown, are planning to appeal the decision.'
The former lower standard of care required by non-executive directors was articulated in Australian Securities and Investments Commission v Rich and Others (2004) 50 ACSR 500, where White J concluded a non-executive director could place reliance on the advice provided by management provided reliance on the advice was reasonable.

4. If the penalties were too harsh they would discourage directors from taking the risks that are necessary if a business is to be successful
It has been suggested that the penalties imposed on the James Hardie directors may be too harsh and may discourage directors from taking the sorts of risks necessary to promote profits and trade their companies out of difficulties.
This point has been made in the Mallesons Stephen Jacques Review, where a commentator has asked, 'At a time when other jurisdictions are looking to salvage their major companies and restore confidence, the question must be asked, what are the limits under Australian law for director and executive duties in the current uncertain and complex times?
Will the recent decisions lead to director and executive resignations and the loss of high calibre directors and officers?
Will they lead to the administrators being dismissed too early and the associated loss of value, instead of encouraging responsible and reasonable risk taking to salvage the business?
If the administrators are to be called in early should the moratorium provisions be extended to preserve essential contracts and value particularly in the floating charge assets?
It can only be hoped that this sensitive and controversial balancing of interests against the backdrop of the global financial crisis will be considered by the Commonwealth in its recently announced audit to be conducted in the second half of 2009 into the laws that impact the issue of company director liability.'
It has been claimed that penalties such as those imposed on the James Hardie company directors have the effect of lifting 'the corporate veil'.
A research note released on August 10, 2004, for the Parliamentary Library, Department of Library Services, states, 'The term 'corporate veil' refers to the protection given by the principle of 'limited liability'. Under this principle, companies are legal entities separate and distinct from their individual members. Hence liability to a company's creditors is limited to the company's assets and does not extend to the personal assets of company members.'
It has been argued that these penalties undermine this protection and as such undermine entrepreneurial risk taking which encourages economic growth.

5. The penalties are likely to send a message to other directors
The Australian Securities Investments Commission (ASIC) has claimed that the court penalties imposed on the former James Hardie Industries board will show companies and directors that they must check the veracity of statements made to the public.
An ASIC spokesperson has stated that the court ruling and penalties illustrate 'that in making statements to the market, companies must carefully assess and check the veracity of those statements'.
ASIC has further noted that the court ruling also provides guidance and direction on the scope and content of the duties of executives when taking matters to the board and disclosing information to the market, and for non-executive directors on approving statements resulting from board decisions.
ASIC chairman Tony D'Aloisio said boards should carefully consider the implications of the court decision and assess what improvements they can make to their decision making processes. This includes the way they convey decisions to the market and the way they conduct investor briefings and so called road shows.
Mr D'Aloisio stated, 'The decision is another important step in improving corporate governance in Australia and that improvement will add confidence to the integrity of our markets.'
Tim Sheehy, chief executive of Chartered Secretaries Australia, said 'whether we like it or not, the current climate is telling us that it is no longer acceptable to shift responsibility to adviser outside the boardroom'.

Further implications
It is worth noting that much of the anger within the general community that has been directed toward the James Hardie directors occurred because of the company's involvement in the production of asbestos which has caused painful disease and death for a large and growing number of people.
Judge Ian Gzell was, however, not passing down bans and fines in relation to the company's having produced a product which injured and killed its producers and users. Rather than this, these fines and bans were imposed because of the company's apparent attempt to sidestep the arrangements it had made to make pay compensation to those injured by its product.
Specifically, the directors were found guilty of having made inaccurate claims about the financial competence of the subsidiary James Hardie had set up to pay the compensation. The directors claimed that in some cases they were unaware of the claims that were being made in documents they had signed. Others claimed they were inadequately informed about the real situation when the signed the misleading statement.
Judge Gzell was convinced by non of these arguments. Some he appeared to consider untruthful and others he found indicative of irresponsible behaviour. Judge Gzell decision appears to redefine the duties of a non-executive company director, making it incumbent upon them to be fully informed about the decisions they endorse.
Though the Hardie case is an extreme one, the extent of the publicity it has attracted may well alter the behaviour of company directors throughout the country. It is likely to raise the standards of accountability appealed to Australian directors.

Newspaper items used in the compilation of this outline
The Age:  April 2, page 8, news item by Selma Milovanovic, `Mediation proves quicker and cheaper than courts'.
http://www.theage.com.au/national/mediation-proves-quicker-and-cheaper-than-courts-20090401-9jt2.html

The Age:  April 25, Insight section, page 6, cartoon.
No web link

The Australian:  April 24, page 3, news item by Michael Pelly, `Hellicar quits after judge's lashing'.
http://www.theaustralian.news.com.au/story/0,25197,25377978-23289,00.html

The Age:  April 24, page 2, news item by Harriet Alexander, `Dying woman determined to get her money from James Hardie' (with photo of Anita Pohlner - print version also has a chronology of events since 2001).
http://www.theage.com.au/national/dying-woman-determined-to-get-money-from-james-hardie-20090423-agt3.html

The Age:  April 24, page 1, news item (photo of Meredith Hellicar) by Elisabeth Sexton, `Judge lashes Hardie's lies'.
http://business.theage.com.au/business/judge-lashes-hardies-lies-20090423-agt0.html

The Australian:  May 9, page 3, news item by Brad Norington, `Asbestos victims in appeal to Rudd'.
http://www.theaustralian.news.com.au/story/0,25197,25451206-601,00.html

The Australian:  May 21, page 6, news item by Scott Murdoch, `Plea over asbestos shortfall'.
http://www.theaustralian.news.com.au/story/0,25197,25514920-2702,00.html

The Herald-Sun:  August 21, page 37, editorial, `Justice at last').
http://www.news.com.au/heraldsun/story/0,21985,25958466-24218,00.html

The Age:  August 21, page 2, news item (photos of directors / executives) by Elisabeth Sexton, `Former Hardie chiefs hit with fines and bans'.
http://www.theage.com.au/national/former-hardie-chiefs-hit-with-fines-and-bans-20090820-es2d.html?skin=text-only