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Former Hardie execs fined, banned -

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ELEANOR HALL: We begin today with the punishments handed out to ten former James Hardie executives.

A New South Wales judge has fined and disqualified all of them for their roles in making false and
misleading statements about the company's asbestos compensation fund.

The penalties follow April's landmark judgement where the former executives and directors were

to have breached corporate law in relation to asbestos claims and a corporate restructure.

The former chief executive Peter Macdonald was fined $350,000 and banned from managing a company
for 15 years.

Former non-executive directors including the chairwoman Meredith Hellicar were fined $30,000 and
disqualified from running a company for five years.

Finance reporter Sue Lannin has been in the court, and joins me now.

Sue, how scathing was the judge about the actions of these James Hardie executives and why the
discrepancy there in the fines?

SUE LANNIN: Well Eleanor firstly it was a penalty hearing today so what we were actually doing is
we had the judgement back in April and he made very scathing comments back then. He called the
former chairwoman Meredith Hellicar "a most unsatisfactory witness".

He recounted how and the different clauses in the Corporations Act and the Corporations Law that he
thought had been breached. That included misleading and false statements to the stock exchange,
misleading and false statements at a press conference by the former chief executive Peter Macdonald
and also false and misleading statements made by the former chief executive at a road show.

Now that all concerns the company's ability to fund asbestos compensation and also the company's
restructure which involved a move to the Netherlands.

Now the fines are much less than ASIC wanted but here is Judge Ian Gzell.

IAN GZELL: Persuant to Section 206C of the Corporations Act I will make the following
disqualification orders.

I will make an order that Peter Donald Macdonald be disqualified from managing a corporation for a
period of 15 years.

I will make an order that Peter James Shafron be disqualified from managing a corporation for a
period of seven years.

I will make an order that Phillip Graham Morley be disqualified from managing a corporation for a
period of five years.

I will make orders that each of Michael Robert Brown, Michael John Gillfillan, Meredith Hellicar,
Martin Koffel, Geoffrey Frederick O'Brien, Gregory James Terry and Peter John Willcox be
disqualified from managing a corporation for a period of five years.

I will make an order that Mr Macdonald pay to the Commonwealth of Australia a pecuniary penalty of

I will make an order that Mr Shafron pay to the Commonwealth of Australia a pecuniary penalty of

I will make an order that Mr Morley pay to the Commonwealth of Australia a pecuniary penalty of

I will make orders that each of Mr Brown, Mr Gillfillan, Ms Hellicar, Mr Koffel, Mr O'Brien, Mr
Terry and Mr Willcox pay to the Commonwealth of Australia a pecuniary penalty of $30,000.

ELEANOR HALL: And that's the New South Wales Supreme Court Judge Ian Gzell handing down those

Sue you were in court. How did the directors react?

SUE LANNIN: The directors actually weren't in court; all their lawyers, there was an army of
lawyers from both sides, from ASIC's side and James Hardie and all of the 10 company officers that
are defendants.

Now ASIC, the Australian Securities and Investments Commission wanted much larger penalties and in
fact for each count, so for each breach of the corporate law each individual could have been fined
up to $200,000 per count. That didn't happen as we heard.

Peter Macdonald was disqualified for 16 years and fined $350,000. In fact ASIC wanted a fine of up
to $1.8 million.

The seven non-executive directors, that includes Meredith Hellicar the former chair woman, they
were disqualified for five years which is what ASIC wanted. They were only fined $30,000. Now ASIC
wanted fines of up to $130,000.

James Hardie itself was fined $80,000. ASIC was seeking a fine of $200,000.

ELEANOR HALL: Did the judge say why he didn't go for the maximum fine?

SUE LANNIN: No, he did not outline any reasons as to why he imposed those fines rather than the
higher fines.

ELEANOR HALL: And what did the lawyer for the asbestos victims? What did she have to say about the

SUE LANNIN: She was very, very surprised and in fact very, very disappointed as she outlined to me
although she thought the case was very, very important.

And let's hear from her now; lawyer Tanya Segelov who assists victims of asbestos diseases:

TANYA SEGELOV: Disappointment in relation to the fines that have been imposed. We are heartened by
the fact that there are bans on the directorship or the management of a company by the executive
and non-executive directors and particularly for Peter Macdonald there is a significant ban.

But we are very disappointed with the small amount of fines and it doesn't, considering that these
directors and executives got multimillion dollar payouts, the fines in case of the non-executive
directors are only $30,000 which is a drop in the ocean compared to what they earned from their
positions in this company.

SUE LANNIN: Was it worth it?

TANYA SEGELOV: Absolutely it was worth it. This is the first time victims have ever had any
concrete findings by a court in relation to the behaviours of Hardie's executives and directors and
that is worth it.

ELEANOR HALL: That's the lawyer for asbestos victims, Tanya Segelov.

And Sue I understand there is an interesting detail there though about the costs.

SUE LANNIN: Yes, now the parties will pay most of the costs and the costs could run into the
millions of dollars but the interesting thing here is some of the former officials - Peter
Macdonald, Peter Shafron, the former company secretary and Phillip Morley, the former chief
financial officer - they actually have to pay a percentage of the costs and that percentage could
actually be higher than the fines they received.

ELEANOR HALL: Sue Lannin our finance reporter, thank you.