James Hardie's dusty secrets unearthed


Asbestos House: The Secret History of James Hardie IndustriesBy Gideon HaighScribe, 2006442 pages, $39.95 (pb)

Asbestos House on the corner of York and Barrack streets, Sydney, was officially renamed James Hardie House in 1979 once the deadly killer, asbestos, had lost its reputation as a wonder material. The Hardie headquarters had, however, been re-christened Asbestosis House a year earlier by striking asbestos workers with graffiti that attested to the horrific asbestos-related disease, as recounted by Gideon Haigh in his book on the James Hardie asbestos company.

Australia was once the world leader in the per capita use of asbestos with the use of "fibro" (asbestos fibre-cement), a durable, cheap, fire-resistant and adaptable building material, dominating the commercial and domestic landscape and, through brake-linings, all roads in between. From the mid-50s to the mid-60s, six out of every 10 new houses in Australia were clad in fibro.

The problem was that asbestos was a deadly executioner. The inhalation of asbestos fibres causes scarring of the lungs, which shrink and are starved of blood. The sufferer becomes emaciated and breathless. Fingers and toes become swollen and clubbed. The disease is painful and irreversible. Bernie Banton, the Hardie insulation worker in its Camellia plant in NSW who was diagnosed with asbestosis in 1999, campaigns for compensation from Hardie whilst tethered to a respirator.

Long suspected as lethal, asbestos was first definitively identified as a cause of death in 1924 in the lungs of an asbestos worker in England. "By the early 1930s", writes Haigh, "the signs, symptoms, radiological appearance and pathology of asbestosis were well understood". It was known to be fatal and to continue to develop long after exposure to the dust had ended.

The hitherto rare cancer, mesothelioma, was also on the rise and causally linked to crocidolite (blue asbestos the nastiest of the asbestos family), which lies in wait for decades before reducing its victims' lives to painful misery and certain death from exposure to the tiniest quantity.

"From the very first", however, "manufacturers and medical authorities were geared to a mutual accommodation" in suppressing this knowledge about asbestos, says Haigh. The threshold for safe exposure was set in 1938 at an overly generous 5 million particles per cubic foot of air on the false assumption that, if not visible, asbestos dust was safe.

Hardie, "perpetually anxious about sales", responded to the growing awareness of asbestosis in the 1940s and 1950s through tame Chief Medical Officers, apathy, intransigence, desultory lip service to health and safety, deliberate concealment of the link between asbestos and asbestosis, and a vigorous fight against compensation claims in the courts. Hardie and the rest of the international asbestos industry, however, were unable to ward off the pressures of a contracting market, negative publicity, critical investigations, union activism and increased government regulation from the early 1970s.

Hardie's new solution was an exit strategy from the asbestos business. By 1987, Hardie had "stripped asbestos from its product range, its name and even its head office" but not its history, says Haigh, a history that eventually caught up with the rebadged company through a snowballing litigation trend, which no amount of confidentiality (or "shut-up") clauses in out-of-court settlements of compensation cases could hold back. Compared to Hardie's profits, recompensing its victims was small beer but its accumulating asbestos liabilities posed an "uncertainty factor in the James Hardie share price", as a worried Hardie executive put it, which focussed their minds on a litigation-free future through a corporate restructure.

Hardie moved its legal base to Amsterdam, consolidated its headquarters in California and listed on the New York Stock Exchange. Hardies ceased to be an Australian company. To limit its financial exposure to a ballooning compensation liability, says Haigh, in 2001 Hardie left behind an under-funded subsidiary in Australia (the Medical Research and Compensation Fund) to handle its compensation claims.

Hardie's executives, says Haigh, knew the fund would fail because its endowment of $300 million, without recourse to the assets of the parent company, was grossly inadequate. The fund soon faced insolvency a $500 million shortfall within three years meant that four in five future claimants would not even have their claims considered let alone met. When the fund went public with its concerns, and the ACTU and victim support groups took up the fight, the NSW government (where most of the claims were based) was pressured into setting up a special commission of inquiry.

At the inquiry, evasive Hardies' executives played dumb on the witness stand, "unable to recollect" events. The commission reported negatively on Hardie's deliberate undercapitalisation of its subsidiary and in 2004 the NSW government gave the ACTU carriage of successful negotiations to make Hardie pay up. It was a much-belated victory against decades of corporate negligence and greed, though tax rulings and other hurdles have prolonged the endgame.

Haigh is largely critical of Hardie's behaviour but, at times, he borders on being apologetic for the company. Hardie's early behaviour, he equivocates, may have been more "sad misadventure" than negligence because Hardies' management in the 1950s were "limited men who thought they knew best", rather than corporate criminals who should have adopted a cautious, safety-first approach with a known industrial poison. Haigh is, fortunately, much less forgiving of the later generation of Hardie's management.

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