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USG Corp., the world''s largest wallboard manufacturer, has reached a settlement regarding asbestos claims made against their company. The company has agreed to allocate a $900 million cash fund for those injured in an asbestos related incident, in addition to a $3.05 billion contingent note. The contingent note however, will not go into effect if the government passes the proposed federal asbestos fund legislation.
USG filed for bankruptcy in 2001 in a moment of desperation following a myriad of asbestos related claims against the company. This decision however proved to be a prudent business move for the company, generating an estimated $1.6 billion in cash and marketable securities. The company has profited substantially from the choice to go bankrupt, increasing profits by over 3000 percent and reaching record high sales by 2005 at $5.14 billion for the year.
USG has now proposed the asbestos compensation fund in an effort to recover from bankruptcy and make financial amends with those injured in asbestos related accidents.
The USG proposal has revealed the severe shortcomings of the federal asbestos fund plan, which some believe to be underhandedly designed to benefit corporations rather than compensate those suffering. The federal asbestos fund plan, which proposes a $140 billion allotment to compensate victims of certain companies, is actually buying off the plaintiffs at a much lower cost.
For instance, should the federal fund legislation not pass in Congress, USG will allot an additional $3.05 billion to compensate victims of their company. If the bill for the federal asbestos fund is enacted, victims would only be compensated 23 cents on the dollar of what they would have received in an independent settlement with the company.
“The USG plan makes plain that the federal trust fund is a corporate bailout in sheep''s clothing”, Joan Claybrook of Public Citizen commented in a statement. “Under the guise of compensating victims for terrible diseases, like asbestosis and mesothelioma, corporate America''s real aim is to run away from billions in liability for knowingly exposing workers to a lethal toxin.”
McDermott International Inc., another company who recently created an asbestos settlement proposal, suggests similar findings.
McDermott''s plan, released in December, highlighted a $350 million trust fund to compensate asbestos victims and showed a future supplement fund for an additional $600 million if the federal fund is not instated. However, should the federal asbestos fund pass, McDermott will only be required to submit an additional $25 million.
Supporters of the federal fund argue that the bankruptcy of these major corporations is significantly cutting into governmental expenses in addition to claiming thousands of jobs from the economy, thus creating solid grounds for a government regulated fund.
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