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O.C. building materials maker sued

James Hardie Industries is targeted by Australian securities regulators over an asbestos fund.

February 15, 2007|From Times Staff and Wire Reports

Building materials maker James Hardie Industries was sued Wednesday by Australian securities regulators over its handling of compensation for people sickened by asbestos in its products.

Hardie's operational headquarters are in Mission Viejo, although it is incorporated in the Netherlands. It was founded in Australia more than a century ago.

Defendants in the suit filed by the Australian Securities & Investments Commission include Chairwoman Meredith Hellicar and former Chief Executive Peter MacDonald. The company declined to comment on the suit, which was filed a week after Hardie made its first payment into a new $1.3-billion fund for asbestos victims.

The suit centers on a news release in 2001 in which Hardie said it had set aside "sufficient" funds to compensate victims of asbestos poisoning. An Australian government inquiry later found that the fund would have run out of money in three years, and Hardie was forced to set up the new compensation fund.

MacDonald and former Chief Financial Officer Peter Shafron, also named as a defendant, resigned in October 2004. Both live in Orange County. They couldn't be reached for comment.

Hardie, which had sales of $1.49 billion last year, employs about 400 people in California -- 250 at a plant in Fontana and the rest in Mission Viejo.

Among the current Hardie directors named as defendants in the suit was Michael Gillfillan, a partner in the San Francisco investment firm Meriturn Partners. Gillfillan could not be reached for comment.

Regulators in Australia are seeking fines and a court ruling that would ban the executives from running public companies there. Officials said a criminal investigation was continuing.

The civil suit, the result of an investigation involving 348 billion documents and the issuing of 284 notices to obtain evidence, was lodged two days before the six-year statute of limitations ran out. Hearings will begin in the Supreme Court of New South Wales on March 15.

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