James Hardie Does Not Have Funds to Cover Asbestos Compensation

The Netherlands-based James Hardie Industries may not be able to pay asbestos victims claims after the U.S. housing crisis has decreased the company’s earnings for the last six quarters.

The company is the largest seller of home siding in the United States and with the housing market in a freefall; the company may have to pay compensation in installments and not the usual lump sum.

This week in a New South Wales Supreme Court it was found that in 2001 the company’s executive board sent out a press release that contained incorrect statements concerning asbestos compensation. Further hearings will challenge whether seven former executives broke corporate law and may be prosecuted. For now, the fund should last for another two years. The companies stock has fallen 29 percent in the past year on the Australian stock exchange.

Strict regulations on the use of asbestos were implemented by the U.S. government in the 1970’s after the hazardous effects were discovered. Still, asbestos exists in many older homes and structures but only becomes dangerous when airborne fibers are disturbed and can be inhaled.

Exposure to asbestos can lead to a number of illnesses including asbestosis and malignant mesothelioma, a fatal form of cancer. Due to a long latency period, symptoms of the disease may take between 20 and 50 years to appear.

Currently, James Hardie’s compensation fund holds around $98.6 million. The organization released a statement saying, “The Company considers that the potential shortfall in the Asbestos Injuries Compensation Fund is regrettable. It will continue contributions to the fund “when its net operating cash flow is positive.”

Source:  http://www.theaustralian.news.com.au/story/0,25197,25381755-5013408,00.html