CASE: James Hardie Industries and the problem of asbestos

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Case facts in brief
• James Hardie Industries (JHI) is a pioneer fibre cement technology and developed a wide range of fibre cement building products.
• Medical research has shown that the inhalation of asbestos during the manufacture of fibre cement products can cause asbestosis, a chronic disease of the lungs.
• For many years numerous workers have lodged claims of compensation for attracting asbestosis with JHI denying allegations of negligence.
• Eventually, JHI set up the Medical Research and Compensation Foundation (MRCF) to handle claims and payments of asbestos poisoning from its products.
• The MRCF was grossly underfunded with A$293 million (estimated $2.2b required)
• JHI relied on estimates obtained from the company’s consulting actuary, David Minty of Trowbridge Consulting.
• There were accusations of conflicts of interest between the actuary (Minty) and JHI

1. Research the case using public sources and describe the facts of the case (e.g. Who? Where? When? and How? (approximately 1,000 words).
• You may want to begin your research with Gunz, S. and van der Laan, S, (2011) Conflicts of Interest and Professional Independence: The Case of James Hardie Industries Limited, Journal of Business Ethics, 98, pp. 583-596. You are expected to read widely beyond this article.
2. How would you describe the ethical behaviour of management towards asbestos victims? Explain your answer. What should be the company’s responsibilities in this situation? (approximately 1,000 words).
3. Describe the conflict(s) of interest relating to David Minty and/or Trowbridge (the firm of actuaries) and JHI. How should Towbridge have dealt with these conflicts? (approximately 1,000 words).
4. In your opinion, would a code of conduct that was effectively enforced by the profession make a difference to Minty/Towbrdge behaviour (approximately 1,000 words).

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