The corporations watchdog won't pursue criminal charges over the way James Hardie Industries NV handled the setting up of a trust to compensate victims of the company's asbestos products and which was found to be underfunded.
The Australian Securities and Investments Commission (ASIC) said the Commonwealth Director of Public Prosecution had agreed with it that evidence gathered during an "exhaustive" investigation on three continents was insufficient to support a criminal case.
ASIC did not name any of those it had considered pursuing, referring only to "non-executive directors" and "certain individuals".
"ASIC has advised those individuals that they will not be the subject of criminal proceedings," it said today in a statement.
The potential for criminal charges to be laid was raised in early 2007, after a recommendation by a New South Wales Special Commission of Inquiry into a trust set up by the building materials maker to fund its asbestos compensation claims.
The trust was found to be underfunded despite the company having claimed it would have enough money to meet future claims.
Commissioner David Jackson, QC, estimated James Hardie's liabilities were more likely to be between $1.5 billion and $2.24 billion, higher than the $293 million the company estimated when it agreed to pay compensation in 2001.
ASIC said today the community may be concerned that it was not pursuing criminal charges against James Hardie, which was accused of trying to evade its responsibilities to victims.
But the watchdog said it would be seeking penalties in a civil case against the company, seven former directors and three former company officers.
In the case, which begins in the NSW Supreme Court on September 29, ASIC will allege the parties misled investors over the company's compensation payouts for victims of its asbestos products.
Among those being sued are James Hardie's former chief executive Peter Macdonald, former chief financial officer Peter Shafron and former chairman Meredith Hellicar.
Each defendant faces maximum penalties of $200,000 if found guilty of various breaches of the corporations law and corporations act and be banned from managing a corporation.
James Hardie said in a statement it will "actively defend" the claims made against it.
ASIC launched the civil action in February 2007, following an investigation it began in late 2004, and after the special commission handed down its findings.
"If successful, ASIC will ask the court to consider disqualifying those former officers and directors from managing corporations and will ask the court to impose fines on them," it said.
"The proceedings should bring into sharp focus the fundamental responsibilities of both executive officers and non-executive directors who are ultimately responsible for significant public company decisions and the release of information concerning those decisions to the share market, to employees (including former employees), creditors and the public.
"ASIC believes this action goes to the heart of the responsibilities of directors of public companies."
ASIC's case will focus on alleged breaches between February 2001 and June 2003 by the company, its former subsidiary ABN 60 Pty Ltd - formerly known as James Hardie Industries Ltd - and the 10 former directors and officers.
One of the claims relates to the cancellation of partly paid shares in ABN 60, which is all that remained of the company in Australia after it moved its domicile to The Netherlands in 2001.
