Morality question as dust will never settle

It seemed like exquisite insensitivity for the NSW Court of Appeal to reduce the penalties originally imposed on directors of James Hardie Industries on the day the second episode of Devil's Dust went to air on ABC TV.

This was a major and engrossing piece of documentary drama, based on the book by ABC journalist Matt Peacock with the delicate title, Killer Company.

We saw the story about how, at first, James Hardie attempted to hide the dangers posed by the mining and manufacture of asbestos then, when its liabilities were dramatically mounting, to spin-off its asbestos subsidiaries into the Medical Research and Compensation Foundation, taking the remainder of the company offshore.

The story was told through the eyes of former Hardie employee Bernie Banton, his wife Karen, the dogged Peacock and Hardie's PR man.

In the TV drama, the spin doctor is called Adam Bourke, although in real life we know it was Greg Baxter, who later went to work as the corporate affairs person for Rupert Murdoch's Australian operations.

The identity and character were changed in order to import a dramatic device of having Bourke's wife struck down with mesothelioma - the result of home improvements in the early days of their marriage.

The idea was to create a sort of tacit, last-minute bonding between the protagonists - although there was drama enough without this flourish.

At the core of the TV and real-life dramas was Hardie's attempt, in effect, to thwart claimants receiving a fair level of compensation for their asbestos-related diseases.

In the redesign of the company and the removal of the toxic part of the business into the foundation, the directors in February 2001 signed off on a media release sent to the stock exchange saying the foundation ''has sufficient funds to meet all legitimate compensation claims'' and the scheme would deliver ''certainty'' because it was ''fully funded''.

The release was a misrepresentation, because the foundation was dramatically underfunded to the tune of around $1 billion. The financial modelling available to the company also showed this statement was false.

With slight variations, the trial judge put the non-executive directors off the track for five years and fined them $30,000 - Meredith Hellicar, Michael Brown, Gregory Terry, Geoffrey O'Brien, Michael Gillfillan, Martin Koffel and Peter Willcox. Two executives, Peter Macdonald and Peter Shafron, received longer suspensions and bigger fines because they knew more than the rest of the board.

It was the non-executive directors whose appeal was determined this week with justices Margaret Beazley, Reg Barrett and Ronald Sackville generally reducing their suspensions from the company directors' roll to around two years and three months and their fines snipped to $25,000 each.

This has been a long and horrible story and a wretched chapter in Australia's corporate life.

The secretary of Unions NSW, Mark Lennon, estimates that by 2020 Australia will have 13,000 cases of mesothelioma and a further 40,000 cases of asbestos-related cancers. By comparison, he points out, the national road toll sits at around 1300.

Devil's Dust claimed that 10 years further on, by 2030, asbestos diseases will have killed 60,000 Australians - more than the country's death toll in World War I. The fact that the disease has such a long lead time makes a thorough assessment very difficult.

''Tradies, home renovators and those simply in the wrong place at the wrong time are starting to present in growing numbers with asbestos-related disease,'' Lennon says.

The NSW Ombudsman pointed out in 2010: ''Approaches to dealing with asbestos across the whole of government have been disjointed, ad hoc and confusing.'' The federal government this year announced a new office of asbestos safety and an agency to co-ordinate the removal and disposal of this material, the fibres of which are so deadly.

The stuff seems to be everywhere. Lennon reminds us the CFMEU stopped work at Barangaroo when asbestos was discovered onsite.

After the trial judge, Justice Ian Gzell, made his findings and handed down penalties in August 2009, the non-executive directors successfully appealed.

Just before Christmas 2010 the Court of Appeal (James Spigelman, Margaret Beazley and Roger Giles) said the Australian Securities and Investment Commission failed to prove to a satisfactory standard the board ''approved'' the draft announcement to the stock exchange. There was one more witness ASIC failed to call: David Robb a lawyer advising the company who had attended the crucial board meeting in February 2001.

As Bernie Banton's wife Karen said of the directors after the appeal decision: ''I really think they've convinced themselves that what they did was OK, and yet it was immoral and it will always be immoral.''

If ever there was a case that demonstrated the yawning gap between morality and the law, this was it.

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