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By Rachel Hewitt
Herald Sun
April 25, 2009 12:01am

THE James Hardie court decision has been described as a “big wake-up call” to the nation’s boardrooms.

Australian Shareholders’ Association chief executive Stuart Wilson said the judgment reinforced the need for non-executive directors to take a “much more meaningful interest” in the companies they serve.

“We have said for a long time that simply turning up to board meetings and reading the board papers on the flight over is insufficient.”

The fallout from the landmark judgment in the NSW Supreme Court on Thursday continued as industry groups and governance experts said they expected non-executive company directors would now be more vigilant in their duties, the Herald Sun reports.

Hardie’s former chairwoman Meredith Hellicar, who Justice Ian Gzell described in scathing terms in his judgment, resigned from her remaining corporate role yesterday.

Ms Hellicar, one of seven non-executive directors denounced in the decision, stood down from the board of entertainment, hospitality and tourism company Amalgamated Holdings.

She has also resigned as a director of AMP and left the boards of Garvan Research Foundation, the Sydney Institute and the Committee for Economic Development of Australia.

Ms Hellicar and other former Hardie board members are liable for fines of up to $200,000 and disqualification from running a company after the judge found they breached the Corporations Act by approving misleading statements about an asbestos compensation fund in 2001.

Three former executives, including then-chief executive Peter Macdonald, were also found to have breached the Act.

James Hardie said yesterday it was considering an appeal against the judgment.

ASA’s Mr Wilson said the judgment was “a big wake-up call for directors and we would expect an increase in their efforts to deal with issues surrounding risk management.”

He said the judge was “particularly damning” of some of the directors who were in the witness box, “and as shareholders we will have to take those comments into account when looking at some of the other directorships that any director may hold”.

Associate Professor John Howe from Melbourne University’s law school said the decision put directors “on notice” that they needed to be more vigilant about “these sort of public relations exercises”.

“That they (need to) actually make inquiries as to whether the information in the release is accurate rather than just accepting the advice or statements of other directors or even the public relations people”.

Justice Gzell described Ms Hellicar as “a most unsatisfactory witness” and said she “feigned” shock during cross-examination.

Another former board member, Peter Willcox, is now on the Telstra board.

Fellow ex-director Phillip Morley is on the board of biotech company Tyrian Diagnostics.

A spokesman for construction and engineering services company Thomas & Coffey said board member Dan O’Brien, another former James Hardie director, continued to “enjoy the full support of the board”.

“Dan O’Brien has kept the Thomas & Coffey board fully informed with respect to the James Hardie situation,” he told AAP.

“The matter is still before the courts and is not yet finalised.”

Corporate governance group RiskMetrics analyst Martin Lawrence expected there would be a lot of comments about how hard it was to be a non-executive director.

But he said that would have to be weighed against the fact there had not been many successful prosecutions of this kind in Australia.

“There really have not been many cases like this,” Mr Lawrence said.

James Hardie shares were down 8, or 1.89 per cent, to $4.15 yesterday.

http://www.news.com.au/business/story/0,27753,25383609-462,00.html?referrer=email&source=eDM_newspulse

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