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Cape has to obtain approval from its bankers and shareholders to compensate asbestos victims

AS IF asbestos was not enough, 72-year old Gideon Mkhonto may soon find himself worrying about the financial health of the company that made him sick.

Mkhonto is one of 7500 South African asbestos victims anxiously waiting for hard-won compensation from London-listed Cape Plc, which used to mine asbestos in Northern Province and Northern Cape. His problem is that the company might not survive long enough to pay him the R55000 he is expecting.

Unfortunately Mkhonto, like so many of the other victims, is unaware that although Cape Plc has agreed to compensate the victims, the financial position of the company is precarious.

It is a prospect that troubles even an optimist like Richard Meeran of Leigh Day & Co, the London lawyer for victims like Mkhonto. Meeran says Cape signed the settlement agreement last month in “good faith” and that he has “every expectation” that Cape will meet its liability.

He says he would never have accepted the deal had he anticipated that situation.

However, Meeran concedes there is still a “risk” that Cape Plc might go insolvent.

In terms of the settlement agreement, Cape has agreed to pay £21m (R351m) into a trust fund to be established in SA. This fund will make payments to those who can prove that they have suffered from asbestos-related disease as a result of working at, or living in, the vicinity of one of Cape’s former mining, milling, or manufacturing operations in SA.

Meeran says the first £11m (R184m) will be paid by June 30, provided certain conditions are met. One condition is that the SA government confirms that it will not fund further legal claims against Cape. Cape also has to obtain approval from its bankers and shareholders for the deal and that it is able to raise the necessary finance.

Meeran says if any of the conditions are not met, the matter would proceed to trial.

He says the second £10m (R167m) will be paid into the trust over a period of 10 years at a rate of £1m a year. “Cape’s ability to meet these further instalments is dependent on the continuing viability of the company.

“ It is not in the interests of the trust or the victims who could benefit from it, for Cape to be subjected to further legal action as this would destabilise the trust.”

Meeran says he is confident the victims would win a trial if it came to one. He believes they would have been awarded at least £40m (R664m).

However, he says, the problem is that if defeated in a trial, Cape would go bankrupt.

“In the circumstances, the only real achievement might have been to set another legal precedent with the victims receiving virtually nothing. This would have been a hollow victory for the victims,” he says.

In the 60s, Cape, formerly known as Cape Asbestos Company, set up asbestos mines in Prieska and Koegas in Northern Cape and Penge in Northern Province.

About two-thirds of the claimants are based in the Northern province and a third in Northern Cape.

Mkhonto is unaware of Cape’s financial position. He does not know that it ever had financial difficulties. He says: “The company owes me and my family.”

He started at the Penge mine in 1965 as a dispatcher. He was diagnosed with asbestos-related disease in 1983. His first symptoms were a constant cough and debilitating eyesight.

Mkhonto says when he was initially diagnosed, Cape offered him R1 491 as compensation.

He is looking forward to receiving the R55 000 and says he wants to send his youngest daughter back to school to complete her education.

Meeran says the claimants have come a long way since the case began.

He says in the process many setbacks were suffered: “The deaths of 300 claimants, two courts of Appeal and two House of Lords decisions.”

Meeran says central to the claimant’s case is the principle that multinational companies undertaking hazardous operations overseas in breach of domestic health and safety regulations should be legally responsible for resultant injuries.