In a landmark legal action, the Australian Securities and Investments Commission is pursuing civil penalties against the entire 2001 board of directors of James Hardie as well as three former executives, alleging that the defendants misled investors over James Hardie’s asbestos-related compensation payouts. Among the defendants are the former CEO Peter Macdonald, former CFO Peter Shafron, and the former chairwoman Meredith Hellicar, according to Business Day.
The case will begin in the NSW Supreme Court on Monday. Each defendant reportedly faces maximum penalties of $200,000 if found guilty of various breaches of the corporations law and Corporations Act, and could be banned from managing a company.
Business Day reports that ASIC launched its civil action in February 2007 after a NSW Special Commission found that James Hardie had significantly undervalued its compensation liabilities. “The trust, which Hardie said in 2001 had sufficient assets to meet all legitimate future compensation claims for asbestos-related diseases, was found by a 2004 special commission of inquiry to be underfunded by $1.5 billion.”
ASIC alleges that the 10 directors and executives breached their duties by not preventing company statements that the 2001 trust was “fully funded”.
