James Hardie executives to face civil proceedings: ASIC
Posted
The Commonwealth Director of Public Prosecutions agreed there was insufficient evidence to proceed with a criminal trial. (AAP: Dean Lewins, file photo)
The corporate regulator says former James Hardie executives will not face a criminal trial for allegedly breaking company law over compensation to asbestos victims, but they will face civil proceedings later this month.
After an exhaustive investigation, which covered three continents and the examination of 122 million electronic files, the Australian Securities and Investments Commission (ASIC) says there is not enough evidence to lay criminal charges against former James Hardie executives for alleged breaches of the Corporations Act.
The Commonwealth Director of Public Prosecutions agreed there was insufficient evidence to proceed with a criminal trial.
But ASIC says 10 former directors and company officers, including former chief executive Peter Macdonald, former company secretary and general counsel Peter Shafron and former chief financial officer Philip Morley will face a civil trial which begins on September 29 in the New South Wales Supreme Court.
James Hardie says it will fight the claims which involve allegations that the former executives and directors made misleading statements and breached continuous disclosure rules in 2001 and 2002 over the adequacy of compensation to victims of asbestos-related diseases, the company's relocation to the Netherlands and the cancellation of shares.
They face fines of up to $200,000 for each offence and could be banned from managing companies.
In a statement, ASIC said, "Among other things, the Court will be asked to consider whether these former directors and officers failed to discharge their duties with due care and diligence."
"The civil action, which looks at the conduct of both executive officers and non-executive directors, will focus on the scope and content of the duties of executive officers, that is the chief executive officer, the company secretary and general counsel and the chief financial officer.
"The proceedings will also examine the obligations of non-executive directors in evaluating proposals put to the board by the company's management."
ASIC says the proceedings go to the heart of the responsibilities of directors of public companies and could set a precedent.
"Directors are asked by management to assess important strategic decisions for a company, which in some cases can amount to 'betting the farm', and to approve disclosure made to the market about those decisions," the statement said.
"The case will provide guidance to executive officers and non-executives in these and similar situations.
"In the future this will benefit companies, their shareholders, employees and former employees who may be impacted by such decisions."
Yesterday ASIC dropped one of the civil claims against the company.
On the local share market, James Hardie shares have closed down 2 per cent to $4.91.
