Asbestos woes

In February of this year, the NSW Premier announced a special inquiry into whether James Hardie Industries Limited deceived the NSW Supreme Court when it successfully applied to move its operations off-shore to the Netherlands in October of 2001. Estimates made by KPMG indicate that compensation claims against the company will amount to $1.6b. The company created a fund with assets of approximately $293m to pay compensation claims and now argues that it has no further liability. Not only are claimants for compensation and the NSW government (itself liable for millions of dollars in compensation) involved, but, according the Sydney Morning Herald, several other companies have become embroiled and may be subject to further investigations: the actuarial firm Trowbridge who produced the first estimates, Hardie Industries' at the time legal firms Allens Arthur Robinson and Corrs Chambers Westgarth.

A brief summary of events.

A further interesting report from Channel Nine.

One of the keys to ethical business and sound business practice, according to Westpac, is the existence of independent and ethical professions such as Accountants and Auditors in whom community can trust to ensure fair reporting and disclosure.

Westpac have downgraded James Hardie Industries NV sustainability standing and sold their Sustainable Fund investments in Hardie.

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The Business Roundtable Institute for Corporate Ethics, based in Charlottesville, Virgina, released a survey of CEOs of members called "Mapping the terrain". CEOs were asked to prioritise their ethical concerns. The results produced the following five most important ethical issues facing businesses today:

1. regaining the public trust;
2. effective company management in the context of today's investor expectations;
3. ensuring the integrity of financial reporting;
4. fairness of executive compensation; and
5. ethical role-modeling of senior management.

However, the facts may indicate another reality. Rushworth Kidder, President of Institute for Global Ethics, notes that, in solely the two weeks to 1st June, 2004, ethical issues cost US corporations $US3.85b.

Mitsubishi has been covering up defects in order to avoid the costs of recalls. Despite repeated assurances to improve transparency, sales have continued to drop and cover-ups have increased. CEO Okazaki bows in sorrow to angry shareholders and promises that, this time, the company will improve.

"Enron's downfall in late 2001 cost thousands of employees their jobs and pensions, destroyed tens of billions of dollars in market value, and pulled back the curtain on a dizzyingly complex fraud scheme." (SMH)