Research the case using public sources and describe the facts of the case.
Asbestos is a set of minerals that could be used for design and manufacture various physical properties. Because of the different uses and the advantages of using this such as sound absorption, resistance to fire, heat; asbestos started to be famous among the builders who were in the constructing field from the late 90’s. The most famous name that was connected along with asbestos within Australia was no other company else than James Hardie Industries Limited (JHIL).
James Hardie Industries Limited (JHIL) is an international building materials company which has been able to maintain there in a leading position. The foundation for the JHIL was laid in the year 1888, when James Hardie arrived in Melbourne Australia. Since then the company has been widely spreading and the company was listed in the Australian Stock Exchange in the year of 1951. During the 1980’s the company has started developing fibre cement technology and today it is a pure fibre cement developing company which carries its business in countries such as New Zealand, United States, Philippines other than Australia and currently employees more than 2,500 people and it earns a revenue more than AUD 1.5 billion per year. In Australia, JHIL manufactures a wide range of products that Reid (2009) has said that ‘whenever one walk in to a factory, office, home or if one step in to a train, put one’s step on brake, there is a chance that JHIL has even a part in that’.
Making the saying that ‘every single thing in the world has its own positives and negatives’, it was discovered that through the inhalation of asbestos, number of serious health issues could be occurred.
Asbestosis- Due to this sickness, the lungs and the chest gets tightened making it difficult to breathe and therefore it ultimately reduces the ability to pass oxygen to the blood.
Mesothelioma- This is a type of a cancer which is developed in the pleura which spreads quickly. This could be infected by a little exposure to asbestos.
Lung Cancer- A cancer developed in the lungs due to the exposure to asbestos.
Such diseases could be considered as a negative impact of the asbestos and therefore the manufacturing firms should be aware of theses as the employees of the company should be victims of such diseases.
From 1970’s onwards, when such sicknesses were reported, information regarding these was disclosed to make the Australians aware. This made the victims to raise the right to be compensated from the companies that they provided their services. Therefore, a number of court cases were raised regarding the compensations and this was even taken before the media as well. The JHIL also had to face the same situation and they were handling the cases smoothly by providing compensation and neutralising the possible problems. Along with the revised Australian Accounting Standards in 1998 and the development of an Exposure Draft 88 (ED 88), the reporting system of contingent liabilities was changed. During this time period, according to Gunz (2011) JHIL was reporting asbestos liabilities at a value of AUD45 million, and this was undoubtedly an under estimated value.
In regard to this, the company reacted on this scenario by isolating the asbestos liabilities from their main objective of operating the company. Medical Research and Compensation Foundation (MRCF) was the final outcome of this and this was set off in the year of 2001, with the main objective of handling the assets that were set aside to distribute among the victims of asbestosis. Even though this was started as a legally separate and sovereign entity from the JHIL, the management of JHIL kept the first step in initiating the MRCF. Also, two out of the four preliminary directors of MRCF included directors or officers who worked for the group prior to the inception of MRCF.
Along with the formation of the MCF in year 2001, it was soon realised…