ID :
22174
Wed, 10/01/2008 - 19:58
Auther :
Shortlink :
https://oananews.org//node/22174
The shortlink copeid
Hardie board may have been misled: court
(AAP) A former James Hardie official has admitted data presented to the directors of the building products company about its asbestos-related compensation liabilities may have been misleading.
The Australian Securities and Investments Commission (ASIC) is suing 10 former
directors and executives of the building products company, alleging they made
misleading public statements about the company's ability to fully compensate
asbestos victims.
ASIC claims misleading statements were made in 2001 when the company set up a
separate trust to cover its compensation liabilities.
Stephen Harman, a financial controller at James Hardie Industries from 1997 to 2002,
was called to the witness box in the NSW Supreme Court trial on Wednesday.
Mr Harman was responsible for drawing up cash flow models for the trust to predict
its longevity.
His work was reviewed by PricewaterhouseCoopers (PwC) and Access Economics in
February 2001, days before it was presented to James Hardie directors at a board
meeting on February 15.
Under cross examination by Thomas Bathurst, QC, barrister for four of the
defendants, Mr Harman admitted a PwC employee had expressed concerns about some of
the key assumptions within his cash flow model.
Asked by Mr Bathurst what those reservations were, Mr Harman replied: "They were
related to the use of one fixed earnings rate."
PwC's independent review of the cash flow model was also limited, the court was told.
In a PowerPoint presentation given to the James Hardie directors on February 15,
there was no mention given to the concerns raised about the cash flow model by PwC,
Mr Harman said.
"The slide I am showing you does not clearly state the limited nature of the review
or the reservations PwC had, does it?" Mr Bathurst asked Mr Harman.
"On its own, without elaboration, it could be misleading, that's correct," Mr Harman
replied.
"Never did you tell the directors of the limited nature of the PwC review?"
"That's correct, I wasn't speaking at the meeting."
Earlier this week the court was told by an actuary who provided estimates to James
Hardie of its future compensation liabilities one of his reports had a "very great
capacity to mislead".
The day after the February 15 board meeting, James Hardie publicly announced the
establishment of the trust, to which it handed over $293 million.
Just two years later it was estimated asbestos-related compensation claims would
reach beyond $1.5 billion.
The trial continues.
The Australian Securities and Investments Commission (ASIC) is suing 10 former
directors and executives of the building products company, alleging they made
misleading public statements about the company's ability to fully compensate
asbestos victims.
ASIC claims misleading statements were made in 2001 when the company set up a
separate trust to cover its compensation liabilities.
Stephen Harman, a financial controller at James Hardie Industries from 1997 to 2002,
was called to the witness box in the NSW Supreme Court trial on Wednesday.
Mr Harman was responsible for drawing up cash flow models for the trust to predict
its longevity.
His work was reviewed by PricewaterhouseCoopers (PwC) and Access Economics in
February 2001, days before it was presented to James Hardie directors at a board
meeting on February 15.
Under cross examination by Thomas Bathurst, QC, barrister for four of the
defendants, Mr Harman admitted a PwC employee had expressed concerns about some of
the key assumptions within his cash flow model.
Asked by Mr Bathurst what those reservations were, Mr Harman replied: "They were
related to the use of one fixed earnings rate."
PwC's independent review of the cash flow model was also limited, the court was told.
In a PowerPoint presentation given to the James Hardie directors on February 15,
there was no mention given to the concerns raised about the cash flow model by PwC,
Mr Harman said.
"The slide I am showing you does not clearly state the limited nature of the review
or the reservations PwC had, does it?" Mr Bathurst asked Mr Harman.
"On its own, without elaboration, it could be misleading, that's correct," Mr Harman
replied.
"Never did you tell the directors of the limited nature of the PwC review?"
"That's correct, I wasn't speaking at the meeting."
Earlier this week the court was told by an actuary who provided estimates to James
Hardie of its future compensation liabilities one of his reports had a "very great
capacity to mislead".
The day after the February 15 board meeting, James Hardie publicly announced the
establishment of the trust, to which it handed over $293 million.
Just two years later it was estimated asbestos-related compensation claims would
reach beyond $1.5 billion.
The trial continues.
