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Motion made,

Hon. Members: Object.


Missile Defence

7 pm

Valerie Davey (Bristol, West): The petition of the Bristol and West region of the Campaign for Nuclear Disarmament, to which I add my support, declares:

To lie upon the Table.

10 Jan 2002 : Column 780

Armley (Asbestos Compensation)

Motion made, and Question proposed, That this House do now adjourn.—[Jim Fitzpatrick.]

7.1 pm

Mr. John Battle (Leeds, West): In October 1995, two families from Leeds, one itself a victim of deadly mesothelioma, won a ground-breaking compensation case against Turner and Newall. They proved that the company was the responsible owner of the old J. W. Roberts Armley factory that had polluted our neighbourhood.

In earlier debates here, since I first raised the issue in November 1988, I have also raised the profile of the struggle for justice for mesothelioma victims from Turner and Newall—a company that initially refused to admit it had anything to do with the J. W. Roberts factory. We showed that it owned the factory. Turner and Newall then declined to release any documents or records, arguing that it could not find them or that they did not exist. Despite denials for four years, and court orders and appeals, the company was forced to release more than 27,000 documents and records, a few weeks before the crucial trial began in 1994.

I recall the words of Mr. Justice Holland at that trial, in the Leeds High Court. In 1995, he took the unusual step of criticising the company for

the plaintiffs

That is from the transcript.

The judge awarded Mrs. Margereson and Mrs. Hancock £115,000 damages between them against Turner and Newall, ruling that although mesothelioma could not have been foreseen as a consequence of the asbestos dust that was blown out of the factory into the neighbouring streets until it closed in 1958, some form of pulmonary injury should have been anticipated by the company and it was therefore liable.

We had won the case—or we thought that we had won. Needless to say, Turner and Newall immediately appealed against the judgment, claiming disingenuously that it was "unsound" on the basis that a distinction could be made between "guilty" and "not guilty" bits of dust—claiming that it was just some kind of lottery when people inhaled.

That grotesque appeal, as Geoffrey Tweedale called it in his scholarly account "Magic Mineral to Killer Dust: Turner and Newall and the Asbestos Hazard", was thrown out of court, but it was another delaying tactic that bought the company a bit more time before they paid out to the plaintiffs. Tragically June Hancock died in 1997, not many months after her long heroic struggle through the courts.

Throughout the case, Turner and Newall has striven to delay and hold back future claims, trying to deny other victims the chance to claim a precedent; but the case was won, and it was forced to pay compensation.

Mr. Justice Holland referred to attrition. In 1995, I thought that the courts had settled it; but the war of attrition against the victims, sadly, is still going on.

Turner and Newall was taken over by an American company, Federal Mogul, in 1998. On 1 October last year, Federal Mogul filed for voluntary chapter 11

10 Jan 2002 : Column 781

reorganisation in the United States and for administration under the Insolvency Act 1986. From that moment, Turner and Newall ceased to respond to or pay out any asbestos disease-related claims. Even cheques issued for cases settled before 1 October have bounced according to solicitors, and one former employee, 74-year-old Thomas Harrison, deposited a settlement cheque for £38,000 that was returned cancelled.

More than 60 Armley neighbourhood cases since 1995 have been completely settled through the courts; some are still in the process of settlement and some are still waiting to be filed. In other words, hundreds of cases are still outstanding. Turner and Newall now refuses to deal with them.

Federal Mogul, the parent company, employs 52,000 people in 25 countries and owns famous brands such as Champion, Glyco and Ferrodo. It is far from being bankrupt. Third quarter sales in 2001 were more than $1,289 million, and sales for this financial year are likely to be more than $5 billion. According to the brilliantly researched British Asbestos Newsletter, issue no. 45—I pay tribute to Laurie Kazan Allen's tireless and selfless campaigning on the matter—Federal Mogul's newly elected chairman and executive officer, Frank Macher, claims that despite the insolvency

On 15 October, a corporate press release boasted that Federal Mogul had secured four new contracts, valued at £20 million, from auto manufacturers and suppliers. The chairman reiterated:

On 11 February, there will be a meeting of the creditors of J. W. Roberts and of Turner and Newall to carry that process of administration forward. Only the creditors can attend to stake their claim. The meeting is closed and is aimed at working towards a long-term global solution to all the company's asbestos claims. It is likely that the UK cases will simply be overlooked at this stage and the result will be legal paralysis for many years.

In a written reply recently, the Economic Secretary stated:

I submit that "crystallise" is an infelicitous choice of word in this case, and it can take years for crystals to form. It can also take years to allocate funds to pay out claims through administration procedures. What will the victims be left with?

The Economic Secretary's reply continued:

But in the Armley cases, we have already had crystal clear direction from the courts. The unequivocal order was, "Pay up now." In other words, the resort to administration looks like a rearguard action of complex corporate gamesmanship to avoid responsibility for paying out legitimate court-won compensation awards. It is not therefore a question of establishing liability, but simply of whether the company has the means to pay.

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Federal Mogul cannot claim that Turner and Newall had no money to pay its compensation debts. If it had remained a UK company, Turner and Newall would without doubt have continued to pay out. Why, we are entitled to ask, was Turner and Newall made insolvent? It was a perfectly viable company in the UK. What information was presented to the judge in arguing the case for administration? Could it be that there is a massive question mark over Turner and Newall's insurance cover? Any lack of insurance cover must be of major concern.

In the past, there were doubts about insurance cover. I have the minutes of the board meeting of Turner and Newall on 10 February 1977, which spelled out that it recognised it was not covered. The minutes say:

They key question is whether the company has been properly covered since that time.

As I understand it, in 1996—after the trial—an insurance policy package was agreed with a consortium of European reinsurers to cap Turner and Newall's asbestos liabilities. The company paid for £500 million of cover, which kicked in after it had paid out a certain amount—I think it was some £373 million—from its own funds. This top-up cover was announced after the verdict on the Margereson-Hancock case in Armley. We are entitled to ask what has happened to that fund. What will happen to it now that we are in the administration process?

At the time, the chairman of Turner and Newall, Sir Colin Hope, said:

Why do my constituents and other victims not now have access to that insurance fund with their claims? Should they not have first claim on that fund? They have gone through the court procedures to get justice. They have legal proof that they are entitled to compensation for negligence, and they ought to receive first call on that insurance money immediately. Where is it? Why cannot it be ring-fenced and made available?

More recently, Turner and Newall has claimed to be "self-insured", or covered by what I understand is called captive insurance—its own in-house arrangements. According to solicitors, before the administration order on Turner and Newall was approved, the company paid out the asbestos claims itself. The cheques were issued by Turner and Newall, not by an insurance company. That is unusual. In other words, the company's insurance cover is indeed like murky water—far from transparent.

Furthermore, questions about that insurance cover have now been ruled out of order as commercially confidential. Even under administration, why cannot the insurers be traced, named and contacted by the victims' representatives? This issue is crucial: has Turner and Newall provided proper insurance cover for itself, or not?

If it has not, why has the company not been investigated for failing to comply with the law? Why is it allowed to sidestep its legal insurance responsibilities? Did it ever apply to Government Departments for exemption from insurance? If it does have insurance, why are payments to those owed compensation now being denied?

10 Jan 2002 : Column 783

Why should funds set aside to pay out to victims who take the company to court and win compensation be held back now in administration? Surely that is a defiance of the legal process for justice. As it is, lawyers representing victims cannot contact the insurer. Turner and Newall claims that it is self-insured and it is in administration. This is tantamount to an insurance self-protection racket.

Turner and Newall should have proper cover and should be able to pay. If not, it seems that we are facing devices to reassure investors rather than to protect and compensate victims. No wonder the insurance industry weekly journal—called the Post—is proclaiming in its headlines "Asbestos purse closed". This is not about benevolent funds and donations; it is about justice, and justice that has already been won against the company in the courts. Obviously, the war of attrition goes on; resisting the pay-outs to reassure the funding markets seems to be the priority.

I wish now to put some specific questions to the Minister of which I have given her notice. At the time Turner and Newall was purchased by Federal Mogul, were any investigations undertaken by Government Departments into the terms of the sale? With regard to insurance, although several solicitors representing asbestos plaintiffs have attempted over the years to see copies of the certificates issued to the company under the Employers Liability (Compulsory Insurance) Act 1969, they have not succeeded. Why is it not possible for claimants' representatives to see the certificates? Why cannot we know about the history of Turner and Newall's employer's liability coverage? Has the Health and Safety Executive over the years been satisfied that Turner and Newall has had insurance that is compliant with legislation? Who were the insurers? What were the dates and nature of the policies? Can the insurance information be put in the Library of the House of Commons so that I can see where my constituents stand?

Does the arrangement under which a company is self-insured and has a so-called captive insurer comply with the Employers Liability (Compulsory Insurance) Act 1969? Finally, under the administration order, why cannot insurance funds be ring-fenced so that UK victims of UK companies who have won their cases in court can have first call on it? Is it lawful to bounce compensation cheques when a company is still trading? Is there any way for funds to be released so that claims can be paid out in cases that have been won?

I do not expect my hon. Friend the Minister to give detailed, chapter-and-verse answers to all those questions, which serve to highlight the issues. However, I should like her to tell me that her Department is to set up an immediate public inquiry into all the issues arising from the application to put J. W Roberts and Turner and Newall plc into administration in the UK.

The effect of that action has been to prevent victims from getting justice. A public inquiry is needed to unlock any funds specifically set aside now, as asbestos victims are both vulnerable and totally innocent. Mesothelioma means that they die of the worst form of cancer imaginable. They do not bring that on themselves, and they deserve compensation. Tragically, those victims do not have years to live and cannot afford to wait.

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If a company such as Federal Mogul has found a way of using administration and bankruptcy procedures to ditch its asbestos liabilities and to refuse to pay anything more to victims, that is a scandal that the Government must address. Making the polluters pay obviously means not only that responsibility must be proved, which we have done, and that the moral and legal arguments must be won—we have done that too; it now means taking on the high-level, international corporate gamesmanship that continues the war of attrition against asbestos victims.

I shall close with words from the heartfelt letter that I received from Mrs. Hancock's daughter. She wrote:

This is a struggle for a just society that must be won. I urge my hon. Friend the Minister to move the whole machinery of Government to see that justice is done as well.

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