Asbestos controversy
Among the companies that majored in the manufacture and sales of asbestos and its affiliated products in twentieth century was James Hardie Corporation. Asbestos mines were distributed throughout Australia. Most of the Asbestos products such as Fibro which acted as a building material led to miners suffering from mesothelioma and asbestosis (Handen, Gurmurdulu & Roggli 2000). Despite numerous companies engaging in asbestos mining activities, most of the infection cases were reported from James Hardie. The main cause of most victims coming from this company was its vast activities in asbestos mining in Australia. By the beginning of 2006, it was forecasted that more than 4600 victims will have filed complaints against the company. Year 2010, would see two hundred and fifty staffs getting infected per year. It is from this claims that the company came to accept that the product was harmful and accepted to compensate employees who had been affected. However, the company claimed that it had implemented all the available protective measures for the sake of its employees (Sexton October 26, 2004).
The issue led to the government intervening and investigating the matter. The company’s management was found to be guilty of falsifying figures in its expenses report. This eventually led to directors of the company being arrested. Nevertheless, no regulations were found to subject the company into compensating the victims. Pressure mounted by trade unions and government led to the company succumbing and opting to come up with modalities for compensating the victims (Australian Securities and Investments Commission 2007). James Hardie asked for tax deductions as a condition for it to be able to compensate the affected victims. The deal was arrived at in 2007 after the company’s shareholders approved the scheme. In the end, James Hardie’s management accepted that asbestos as harmful to health and started including caution stickers on its products. People were warned against breathing dusts from the products as it caused cancer. The hazards of asbestos mining led to James Hardie terminating its operations in 1987.
Credibility of directors’ actions
In every organization, directors are subject to instructions from shareholders of the organization. No decision within the organization can be implemented without first being approved by the shareholders. As a result, James Hardie directors were right by claiming that their actions were based on instructions from the shareholders. They could not in any way decide to compensate the victims without shareholders approving it. Besides, it was not one of the corporate social responsibilities that the company compensates its staffs in case of accidents while working for the company (Arron 2009).
Support of tax avoidance strategy
Based on the findings from investigations conducted in the company, James Hardie was not in any way liable to compensating its employees. The government and the trade unions would not have been able to force the company compensate the victims of asbestos. To arrive at a common ground where no party would go unsatisfied, the victims have to support the tax avoidance requested by James Hardie (Australian Council of Trade Unions 2007). This is the only avenue through which they will see the company accept to compensate them. The conflict between the company and the government saw the company prolong the period for coming up with modalities of compensating the victims. This sent a warning signal to victims that if they did not compromise their stand, they would go without being compensated (Hall September 5, 2008).
Reference List
Arron, C., 2009. Corporations as Social Institutions: A Sociological Perspective on the Legal Regulation of Corporations. SaarbrĂĽcken: VDM Verlag.
Australian Council of Trade Unions., 2007. James Hardie Asbestos Victims Compensation Background Facts. Web.
Australian Securities and Investments Commission., 2007. ASIC Commences Proceedings Relating to James Hardie. Web.
Hall, E., 2008. ASIC Drops Criminal Pursuit of James Hardie. The World Today.
Handen, Z. E., Gurmurdulu, D. & Roggli, V., 2000. Environmental Malignant Mesothelioma in Southern Anatolia: A Study of Fifty Cases. The National Institute of Environmental Health Sciences, 108(11), pp. 1047-1050.
Sexton, E.,2004. Hardie Promises to Support Victims. The Sydney Morning Herald, p. 2.