Exploring Shadow Accountability: The Case of James Hardie and Asbestos

Abstract

Accountability brings to the fore a range of discourses that are said to provide an account. This paper takes the controversial issue of asbestos to explore silent and shadow accounting as a means of providing a more holistic accountability. The practice of silent and shadow accounting is built on a long tradition of counter narratives that expose deficiencies in corporate disclosure and provide shadow accountability for corporate activities. By drawing on these counter accounts from civil society and others, we initially develop a taxonomy of corporate disclosure gaps – praxis, reporting, truth and potential. Using the Silent and Shadow Reports of James Hardie Industries SE, the former dominant manufacturer of asbestos products in Australia, we provide empirical evidence to support an understanding of these disclosure gaps. The shadow metaphor is then invoked to understand the multidimensional concept of shadow accountability.

Acknowledgement

This work was supported by ACCA Grant.

Notes

1 Although limiting, this genre is consistent with the CSEAR Approach (CSEAR 2010) and academically informed shadow accounting project.

2 ‘Fibro’ is the name given to fibrous sheeting containing asbestos used extensively in the post-war housing boom in Australia. Its heat resistance and durability made it an inexpensive and versatile building product for Australia's hot climate (Pickett 1997).

3 This paper is informed by a larger project that was funded by a research grant from ACCA. The report from the full project is available at: http://www.accaglobal.com/an/en/technical-activities/technical-resources-search/2013/march/the-case-of-asbestos.html.

4 Growth in the cost can be attributed to many factors including increases in claims, settlement amount, legal and administrative costs. In Australia, the USA and the UK, growth in claim numbers has far exceeded original projections (Donlevy and Perkins 2005).

5 In 2003, Orszag claimed that 61 US companies had filed for bankruptcy protection under Chapter 11 of the US Bankruptcy Code solely as a result of asbestos litigation (Orszag 2003).

6 Today, James Hardie is the world's largest fibre cement manufacturer with global net sales of US$1.49billion http://www.jameshardie.com.au (accessed 2 October 2014).

7 Again in 2010, the parent entity redomiciled to Ireland, despite the majority of shareholders residing in Australia.

8 The Silent and Shadow Reports are standalone documents and are available at http://www.accaglobal.com/an/en/technical-activities/technical-resources-search/2013/march/the-case-of-asbestos.html

9 Although tangential to asbestos, the redomicile of James Hardie to the Netherlands in 2001 was predicated on favourable tax treatments which were not fully realised. The tax benefits expected from this move did not materialise and tax issues were again cited as a primary reason that James Hardie sought approval to redomicile to Ireland later in the year.

10 ASIC v Macdonald (No. 11) [2009] NSWSC 287.

11 CSR Limited is a company listed on the Australian Stock Exchange which also carries significant asbestos liabilities primarily due to its former asbestos mining and export operations.

12 Amaca Pty Ltd v Ellis; The State of South Australia v Ellis; Millennium Inorganic v Ellis [2010] HCA 5

13 The third wave affected former construction and allied industries using asbestos. A fourth wave is said to result from decaying asbestos products in the environment and affects not only workers but the general population. DIY type home improvers are at a particular risk. The fifth wave is predicted to affect workers in asbestos removal from the unsafe removal of asbestos products http://www.asbestosdiseases.org.au/asbestos-in-the-community.html.

14 This was revealed in the 2009 book Killer Company by Australian author and journalist Matt Peacock.