Justice for UK Asbestos Victims
Earlier this year, the insolvency of Chester Street Insurance Holdings Ltd., formerly Iron Trades Holdings Ltd., threw into doubt compensation payments for thousands of UK asbestos victims (newsletter issue 42). As more was revealed about questionable corporate reorganizations and payments to Chester Street executives, public and political pressure intensified for a public enquiry. On March 31, one thousand demonstrators gathered to protest the injustice caused by the collapse of Chester Street at a march and rally organized by the Clydebank Asbestos Group in Scotland. Speakers included: Bill Speirs, General Secretary of the Scottish Trade Union Congress (STUC), Joan Baird of Clydebank Asbestos Group, Andy White, Leader of West-Dumbartonshire Council, Tony Worthington, Member of Parliament (MP) for the Scottish constituency of Clydebank and Milngavie, Des McNulty and Lloyd Quinan, Members of the Scottish Parliament, and Frank Maguire, solicitor/campaigner. Asbestos victims, their relatives, trade unionists, activists, politicians and academics demanded answers. Leaflets distributed at the Clydebank Town Hall described a harsh reality: "5,000 Scottish shipyard workers will die of asbestos-related illnesses in the next 10 years because of their exposure to asbestos at work. If the Chester Street scandal is allowed to continue unchallenged, thousands of asbestos victims will be denied justice." The STUC calculates that since 1997, eighteen hundred people in Scotland have died as a result of occupationally contracted asbestos diseases. Calls made from the platform for a public inquiry were supported by the demonstrators. Tony Worthington was "proud that Clydebank is leading the way in the UK to protest against this scandal," but outraged by the insurers' betrayal of ordinary working men and women. He raised concerns over the actions taken and remuneration received by Chester Street/Iron Trades' executives, last year's sale of Iron Trades Insurance Company Ltd. to the Australian insurance multinational QBE and the failure of the Financial Services Authority (FSA) and other government agencies to protect the public. Helen Liddle, the Secretary of State for Scotland, sent a message of support: "The Government is making it clear to the insurance industry that they cannot just walk away from this matter. The industry cannot stand by and let individuals suffer as a result of the collapse of Chester Street."
For nearly two years, the Asbestos Sub-Committee of the All Party Group on Occupational Safety and Health has provided an essential conduit between the government and asbestos victims' groups, trade unionists, personal injury solicitors, journalists, campaigners and non-government organisations. The effectiveness of this Westminster body has been proved during the current campaign. Chester Street was the main topic of discussion at committee meetings on February 14, March 27 and May 1. Michael Clapham, MP for Barnsley, West and Penistone and Committee Chair, briefed the group on developments including meetings with PriceWaterhouseCoopers, the provisional liquidators, the FSA, the Association of British Insurers (ABI) and Melanie Johnson, Economic Secretary to the Treasury. Clapham was optimistic that pressure being exerted by Andrew Smith, Chief Secretary to the Treasury, and the personal involvement of Gordon Brown, the Chancellor of the Exchequer, would be pivotal.
Since January, MPs have kept the issue on ministerial agendas through personal contacts, Early Day Motions, Parliamentary questions and public discussions. On April 3, Tony Worthington called for an independent enquiry into Chester Street during a Commons' debate. Speaking for the government, Helen Liddle reassured the House that efforts were being made to ensure that asbestos victims would be compensated and that the reasons for Chester Street's insolvency would be revealed. On April 30, Stephen Hepburn, MP for Jarrow, secured an adjournment debate during which he pointed out that "the scandal of Chester Street… is fundamentally not about money but about people's lives. The TUC (Trades Union Congress) has estimated that a victim dies of an asbestos-related disease every 10 days in my area of South Tyneside." As well as one hundred per cent compensation for all Chester Street's asbestos victims, Hepburn demanded "that there should be a full public enquiry into the Iron Trades and Chester Street Holdings scandal." During this debate, Michael Clapham requested that the government comment on its plans to prevent other insurers from following the Chester Street precedent. The response by Melanie Johnson was unsatisfying: "we are looking closely into the issues raised by Chester Street." With the prospects of a general election looming, observers felt the situation would remain unresolved for some months. However, on May 10, Andrew Smith announced that a settlement had been agreed. Replying to a Parliamentary question by Tony Worthington, Smith declared that a deal "between Government and the private sector, in which the Government is meeting its liabilities to former public sector employees and the insurance industry is covering claims from former private sector employees" had been reached. The insurance industry will cover Chester Street's financial liabilities where an employer no longer exists or is insolvent in the following circumstances:
if a compensation award was settled before Chester Street's insolvency on January 9, 2001, the Policyholder's Protection Board (PPB; funded by a levy on insurers) will pay 90% of awards in respect of pre-1972 (1975 in NI) liabilities and 100% of awards where exposure occurred after 1972 (1975 in NI);
if the compensation award was settled on or after January 9, the insurance industry will fund equivalent payments pending the implementation of the new industry-funded Financial Services Compensation Scheme (FSCS) planned to come into effect in November, 2001 (the as-yet unknown starting date for the FSCS is being referred to currently as N2).
The U-turn by the insurance industry came as a surprise. The publication of a letter from the ABI in the Financial Times (FT) on June 20, 2001 and an FT article the following day explain some of the political reasons for the industry's change of heart. The two-page ABI letter was sent to 254 member companies after the June 7th General Election. Ian Chippendale, Chairman of the ABI's General Insurance Council Management Committee, wrote: "ABI worked closely with the Treasury and the PPB to establish what options there were, and took legal advice from counsel on whether PPB was liable for the pre-1972 claims. In the event the legal advice was inconclusive, but the ABI Board agreed that the legal position should not be tested in the courts. There would have been massive damage to the industry's reputation from being seen to deny compensation to people dying from asbestosis on the basis of fine legal distinction… the outcome is the best that could be achieved. Above all it has avoided a PR disaster for the whole industry and allowed the industry to build constructive relations with key Treasury ministers." Chippendale estimates that the cost to the ABI of meeting the claims settled between January 9 and N2 will be £4-5 million; the PPB believes the ultimate cost of the post-1972 claims, paid by a levy on all general insurers proportional to their general insurance premium income, over the next twenty years will be £1 billion. Although Gordon Brown is not named by Chippendale, it is clear that the reference to "members of the Cabinet" from affected constituencies includes the serving MP from Dunfermline East. Keen to build bridges with Ministers in the second-term Labour government, the industry accepted that it would not be well-served by slugging it out with Brown who, having served the same area for sixteen years, is well aware of the tragic asbestos legacy suffered by local people many of whom worked at the Royal Naval dockyards at Rosyth.
The news of the settlement has been greeted with relief. Jimmy Cloughley, a voluntary worker at Clydebank and one of the organizers of the Scottish demonstration, said: "The victory/settlement means so much to so many people throughout the length and breadth of the UK. It is an example of the strength of ordinary people when faced with a gross injustice to take on large corporations and win. The justice of this case was obvious to the Clydebank Asbestos Group who felt they had to organize themselves against the Chester Street insurance liquidation." Cloughley paid tribute to local and overseas supporters including two trade unions in Australia which organized a simultaneous protest in Melbourne against the Australian firm QBE, the new owner of Iron Trades. Bill Speirs of the STUC congratulated the government "on the result they have got from the insurance industry in relation to Chester Street. But even more credit goes to the campaigners, including the trade union movement, who moved so quickly following the Chester Street debacle. It goes to show that sharp, focused campaigning can really make a difference." Since January 9, Frank Maguire and Ian McFall, at the Glasgow and Newcastle offices of Thompsons Solicitors, have worked tirelessly to establish the facts behind the insurer's collapse and compile legal arguments for government intervention. In a telephone interview, McFall said: "I always believed that there would be a resolution to this problem; it was unthinkable that society could turn its back on thousands of innocent asbestos victims. Although we can now see the light at the end of the tunnel, I am still concerned at the details which remain to be clarified regarding the operations of FSCS."
The matter of a public enquiry remains on hold while the government waits for the report of the provisional liquidator. According to Helen Liddle: "The Provisional Liquidator of Chester Street is investigating the company's affairs. The Government will remain in close touch with the Provisional Liquidator. We are not ruling our further enquiries." Although, a PriceWaterhouseCoopers spokesperson confirmed on June 21 that a wide-ranging investigation into the financial affairs of Chester Street was proceeding, he was unable to provide a date by which the report would be available. In view of the clamour for a public enquiry into Chester Street, is it wise for the government to rely on external findings before taking action?
July 17 2001
