Asbestos Litigation Worse Than Enron
Billions in asbestos lawsuits threaten more and more companies – now European companies are being targeted
Jürgen Dormann is after seven weeks as ABB chief already with her back to the wall. Combustion Engineering (CE), U.S. subsidiary of the Swedish-Swiss conglomerate, is facing a lawsuit flood of asbestos victims. CE has already paid approximately 865 million in damages. But the number of applicants has grown to over 110,000th The parent company had already increased its asbestos reserves in early 2002 to 940 million dollars. Dormann now announced that this will probably not be enough.
Europeans in their sights. ABB is no longer an isolated case. So far, companies settled asbestos claims over 54 billion dollars. The US-edge research institute estimates that the demands are growing to 210 billion dollars. And European companies, which buys the time too careless in the U.S. are now in a predicament. Against the French building materials producer Saint Gobain 100 000 applicants have already joined forces: the U.S. subsidiary Certain Teed will have used mass asbestos.
The top manager of the asbestos companies pursue Dormann’s defense strategy, as well. To limit the damage, will head the ABB CE request for bankruptcy protection. Analysts are skeptical. “We have no company is known, which could escape from the insolvency of a daughter’s complaints,” says Raymond Greaves of the investment bank Merrill Lynch. Greaves estimates the risks of asbestos-ABB to over three billion dollars, three times as much as the company previously taken into account.
Already 68 U.S. corporations fled to the protection of creditors – and this is just the beginning, “estimates Rand economist Stephen Carroll. The 210 billion dollars, which could cost the asbestos scandal, have economic dimensions. “This money is needed for major investments,” said Carroll. The American trustee David oysters already makes gloomy prophecies: “It happens very slowly and therefore attracted little attention. But the asbestos problem, the economy is more dramatic than the balance sheet scandals of Enron . ”
Insurers under pressure. The Barrage are also insurers: some 80 billion dollars alone European insurance companies cost-Asbestos Litigation in the next 15 years, the accounting firm Price-Waterhouse Coopers estimates. The Alliance , Europe’s largest insurer, rose a few weeks, the provisions for its U.S. subsidiary, Fireman’s Fund by about $ 750 million. The Munich Re has 1.3 billion for asbestos claims made in the reserves.
Other German companies come to the attention of the judiciary. That is how the U.S. subsidiary of chemical giant Bayer under pressure because it incorporates asbestos in buildings. Also, Fresenius Medical Care threaten lawsuits. The group is said to have acquired the dialysis business of the now bankrupt U.S. company WR Grace too cheap to reduce outstanding asbestos compensation.
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