Necessary explanations

Stephan Schmidheiny, pioneer in the fight against exposure to asbestos

Stephan Schmidheiny is a world leading Swiss entrepreneur in the areas of venture capital and innovative social investment through philanthropy. His visionary ideas have helped advance the triple bottom line¹ approach since 1976, when he took the helm of the family business, the Swiss Eternit Group (SEG), from his father at 28 years of age and the global sustainable development agenda since 1990, when it was globally launched.

A few months after taking the reins at Eternit, Schmidheiny gathered the company’s managers to encourage them to implement the “safe use of asbestos” procedures. These were based on the current knowledge of them time and aimed at mitigating safety risks in the handling and transport of asbestos. SEG accordingly invested millions of dollars to make industrial facilities safer, developed programs to care for the environment, and already beginning in 1976 invested in research to find a material to replace asbestos in the manufacturing of fiber cement sheets.

In 1984, Eternit, under Schmidheiny’s leadership, had eliminated asbestos from the manufacturing process for the majority of its products. Schmidheiny was thus years ahead of the industry and State bans, as at that time asbestos was still widely used. Only from 2006, the international organizations WHO and ILO campaigned for a worldwide ban on asbestos processing. To date, asbestos processing is banned in only one-third of countries worldwide. According to the World Health Organization (WHO), 125 million people around the world are still being exposed to asbestos at their places of work.

The investment required to make these changes wiped out a large part of the inherited wealth. In the course of the 1980s, Schmidheiny sold all the holdings of the Swiss Eternit Group and decided to start over as an entrepreneur. During that period, he became a pioneer in venture capital investment. He acquired companies with an urgent need to adapt in order to continue operating and invested in sectors in crisis, such as Swiss watchmaking, which at the time was facing impressive threats from Japanese technology. Schmidheiny thus managed to rebuild his wealth by modernizing companies and industries that, by traditional investment standards, would have been dead ends.

During the 1990s and the early 2000s, he became a global leader in sustainable development. He helped organize the Earth Summit in Rio de Janeiro in 1992 and promoted the creation of the World Business Council for Sustainable Development (WBCSD). At the same time, he chose to roll out an innovative social investment strategy in Latin America, by creating Fundación Avina, to promote social and business leadership in sustainability and inclusion, and launching Fundes, to strengthen the capacities of small and mid-size businesses to contribute to economic and social development and job creation.

To ensure the longevity of this work, after he retired from business life and active philanthropy, he created VIVA Trust in 2003 which combines productive activities and philanthropy in a single strategy. The principle is that the dividends of the productive endeavors support philanthropic activities and provide financing for the philanthropic organizations that he founded, which continue to produce transformations far beyond Schmidheiny’s personal contributions. At the same time, Schmidheiny stepped down from the board of Fundación Avina, turning its strategic and operational management to a regional board, and its management and initiatives to a highly committed staff, currently 74 people.

Viva Trust received the shares previously held by Schmidheiny in Grupo Nueva, the holding of his productive investments in Latin America. Neither VIVA Trust nor Fundación Avina ever received money from Eternit, and they have never supported any initiatives related to asbestos. VIVA Trust is one of many sources of financing for Fundación Avina, which also co-invests millions of dollars in Latin America alongside other donors, companies, and multilateral development institutions.

Fundación Avina was created in 1994, and in accordance with the efforts and commitment of its founder, is expressly against the continued use of asbestos in any industry. Its position is that public officials in every nation should adopt rules and regulations to ban the production and use of asbestos and take action to protect the rights of people affected with asbestos-related diseases.

Since 1994, Fundación Avina has invested 582,185,000 USD, principally in Latin America, to support its allies’ initiatives as part of collaborative processes to promote sustainable development, as well as to support the organization’s own operations. Of this total, Fundación Avina invested 164,955,000 USD in funds provided by its founder up until 2003, and a total of 417,230,000 USD in funds provided by VIVA Trust since 2004. In addition, since 2008, Fundación Avina has leveraged 113 million USD from co-investors who lend their support to the collaborative processes in which our organization and our allies participate.

The trials in Italy

Italy is the only country that is conducting criminal proceedings against individuals to deal with the asbestos disaster. In most other industrialized countries where asbestos is banned, the state and the industry have found joint solutions to mitigate the social tragedy.

The allegations relate to the period from 1976 to 1986: In 1976, Stephan Schmidheiny’s father, Max Schmidheiny, handed over the management of the Swiss Eternit Group SEG to his then 28-year-old son Stephan. At that time, the Swiss Eternit Group SEG held equity stakes in local Eternit companies in 32 countries, including the Italian Eternit SpA which was founded in 1907 by an Italian engineer, almost 70 years before Stephan Schmidheiny was allegedly involved. In 1986, the Italian Eternit SpA went bankrupt.

The prosecutors argue that Stephan Schmidheiny orchestrated a worldwide conspiracy to conceal the danger of asbestos to human health. Allegedly out of pure greed for profit, he had failed to take the necessary safety measures in the Italian factories and thus knowingly and willingly had caused the deaths of workers and residents of the Italian Eternit factories. These allegations are pure invention, contradicting both the facts of the case and the evidence presented in the various legal proceedings.

Eternit’s first trial in the Italian courts took place between 2009 and 2014. The Turin prosecutor, Raffaele Guariniello, accused Stephan Schmidheiny of intentionally causing a disaster (Art. 435 of Italy’s Penal Code) and of intentional non-compliance with safety measures (Art. 437 of the same). It was alleged that thousands of employees and residents of the areas around Eternit’s old plants in Italy had been exposed to asbestos dust, which led to deaths caused by asbestos-related illnesses. The trial ended in 2014 with the acquittal of Stephan Schmidheiny. The highest court in Italy (Corte Suprema di Cassazione) found that the statute of limitations on the crimes of which he had been accused had expired before the trial began in 2009. The Italian Supreme Court made no pronouncements on the content of the case and concluded that the criminal proceedings should never have occurred.

With its ruling to vacate the case against Stephan Schmidheiny, the Supreme Court addressed one of the trial’s serious irregularities: prosecuting him for events outside the statute of limitations. This is in addition to the other instances of arbitrariness that prevented him from proving his innocence.

The Italian Attorney General, Francesco Iacoviello, affirmed that the case had no legal basis and requested that it be vacated without reopening the case. The defense always maintained that Schmidheiny’s right to an impartial trial was violated, per Article 6 of the European Convention on Human Rights (ECHR), as well as the principle of “no punishment without law,” according to Article 7 of the ECHR.

Despite the ruling, at the end of 2014, Raffaele Guariniello made more allegations against Stephan Schmidheiny. This trial is known as “Eternit bis” or Eternit Trial 2.0. In this instance, the prosecutor presented the same charges from the first Eternit trial, almost without changes, except for modifying the criminal charge to “voluntary homicide.” The majority of the 258 people affected by asbestos-related illnesses had already been named as victims in the first trial. This clearly is a repetition of the circumstances that have already been subject to a final and definitive ruling by all of the proper judicial authorities, and, therefore, it constitutes a violation of the principle of double jeopardy.

Nonetheless, the charges were presented at preliminary hearings in Turin. In November 2016, the court in Turin determined that only the plant in Cavagnolo was located in its jurisdiction. The court referred the cases for the plants in Casale Monferrato, Napoli-Bagnoli, and Rubiera to the corresponding prosecutors’ offices for them to carry out their own investigations. With regard to the cases in Cavagnolo, the court determined that the allegation of “voluntary homicide” was legally indefensible, and that the charge should be changed to “negligent homicide.” The Turin prosecutor’s office appealed this decision before the Italian Supreme Court, which ruled in December 2017 (and in May 2018 when it issued the ruling in writing) confirming the lower court’s decision in the preliminary hearings. The Supreme Court declared, explicitly, that the allegation of intentionality was legally indefensible. The charges known as “Eternit bis” are now divided into four separate legal proceedings.

“Eternit bis – Turin”: after a two-year trial, a conviction for negligent homicide of one worker and one resident of the Eternit factory in Cavagnolo was handed down in May 2019 with a sentence of 4 years imprisonment. This sentence has been appealed by the defense; the start of the second instance trial has not yet been determined.

“Eternit bis – Naples”: the Naples prosecutor presented charges in August 2017, alleging voluntary homicide of eight people. The preliminary judicial proceedings ended in January 2019. The main proceedings in the court of first instance for the voluntary homicide of six employees of the Eternit plant in Napoli-Bagnoli and two local residents began on April 12, 2019 in the Naples court and is still ongoing. This trial, therefore, contradicts the Supreme Court ruling indicating that Stephan Schmidheiny cannot be accused of acting intentionally in this case.

“Eternit bis – Casale Monferrato”: the criminal investigation carried out by the Vercelli prosecutor’s office, which has jurisdiction, ended in March 2019. In January 2020, a judge in Vercelli authorised a trial, which started in June 2021 before the jury court in Novara. The court examines the charge of the voluntary homicide of 62 employees at the former Eternit factory in Casale Monferrato, and 330 local residents. Following Stephan Schmidheiny’s 2014 acquittal in the first Eternit proceedings, the ruling marks the start of what is now the third “Eternit bis” trial in Italy. All of the “Eternit bis” trials are blatantly unlawful in terms of both form and substance.

“Eternit bis – Rubiera”: the prosecutor’s office in Reggio Emilia is conducting the criminal investigation, as it has jurisdiction in the case.

In the new trials Stephan Schmidheiny’s defence will prove that he managed the Swiss Eternit Group, SEG, responsibly in compliance with the laws and the highest safety standards in effect at the time. Schmidheiny was not on the board of directors of the Italian Eternit SpA, neither did he have any management role at the company. SEG, which he managed, was a shareholder in Eternit SpA, and it is a matter of record that it did not earn a profit from its Italian holdings at any point during the 1976–1986 period that is relevant to the trials. Indeed, SEG made substantial funding available to its Italian subsidiary. It has been proven that, by means of capital increases and loans, SEG permitted the Italian Eternit SpA to make investments of some 86 billion lire (equivalent to around USD 325 million today) in workplace safety and improving production facilities. Eternit SpA went into liquidation in 1986 – the result of its Italian competitors then producing cheaper products from asbestos cement.

Some 1,000 firms in Italy, including many state-owned operations, used asbestos in their production. Despite this, the Italian state ignored the regulation of asbestos processing and use for decades. The Italian government’s failures in regulating asbestos processing are documented in detail in the judgment of the Italian Supreme Court in the first Eternit trial, issued on 19 November 2014. It states that the government only began to regulate asbestos processing long after the closure of factory in Cavagnolo in 1982, and the liquidation of Eternit SpA in 1986.

The EU issued Directive No. 83/477/EEC on the protection of workers from the risks related to exposure to asbestos at work in 1983. This Directive specifies the maximum permissible concentration of asbestos fibres at industrial plants, and was to have been adopted by the member states into their national laws by the beginning of 1987 at the latest. In its judgment of December 1990, the Court of Justice of the European Union found that Italy had not implemented this Directive and had thus failed to fulfil its obligations under the EEC Treaty. Only in 1991 did the Italian state issue a corresponding directive. In March 1992, it then declared a ban on asbestos. By following internationally recognised safety standards, SEG thus applied much stricter norms to the production processes at the Italian Eternit SpA than were required by the Italian government or used by Eternit’s competitors and the industry.

In a further judgment, the Italian Supreme Court also commented on the situation at the Eternit factories – and knowledge about the dangers of asbestos – at the time. According to the written judgment issued by this highest court of appeal in May 2018, the level of knowledge then at both government and industry levels was based on the assumption that asbestos could be used safely, which is why asbestos processing had been permitted in Italy until 1992. The court’s judgment also pointed out that government labour inspectors had always found the production processes at the Eternit factories to be prudent and compliant during the Swiss period, and had confirmed this accordingly.

Stephan Schmidheiny is not responsible for either the asbestos tragedy or the deaths of the individuals concerned. Rather, his conscientious approach within the industry spared countless people contracting an asbestos-related disease. Schmidheiny is regarded around the world as a pioneer in dealing with the risks of asbestos processing. Based on his entrepreneurial and philanthropic beliefs, Stephan Schmidheiny has taken care of the victims of the asbestos catastrophe in Italy for years. Since 2008, he has been offering compensation to former employees and residents of areas surrounding Eternit factories who are affected by an asbestos-related disease associated with the “Swiss period”. The initiative is accessible also through the website www.offerta-eternit.it. More than 2,000 people have taken advantage of this offer, and compensation of more than 55 million USD has been paid out. Stephan Schmidheiny will continue to maintain this programme for the benefit of the victims of this social tragedy.

For more information about Stephan Schmidheiny: www.espacioschmidheiny.net

To view Avina’s statement on asbestos: https://www.avina.net/posicionamiento-de-avina-sobre-la-explotacion-y-uso-del-amianto/

Please direct any questions or concerns to Carlos March: carlos.march@avina.net

Sorry, this entry is only available in Português and Español.

Many conclusions can be drawn regarding Stephen Schmideiny’s career from the article, “Stephan Schmidheiny, asbestos magnate, sentenced to 18 years in prison for ‘permanent intentional environmental disaster,’” published in June 2013, which require the following explanations:

Before becoming an asbestos magnate, in the 13 years between his inheriting Swiss Eternit in 1976 at the age of 29, and selling his shares in 1989, Stephan Schmidheiny was the global leader in the elimination of asbestos in industrial processing.

In 1976, just months after assuming the leadership of Eternit, he held a meeting with managers and directors requesting that they take on the challenge of implementing better safety measures for the handling of asbestos, a policy that would become formalized with the use of the “New Technology” program. In 1981, before the establishment of all state regulations and policies, Schmidheiny announced his decision that Eternit would stop using asbestos and, in 1984, most of Eternit’s production replaced this component with another that was paper-pulp based.

In 1989, after investing millions of dollars in programs on the safe handling of asbestos and the research to find a substitute—which led to the unviability of several of Eternit’s plants that were later shut down due to Schmidheiny’s decision to end the use of asbestos—he decided to sell all his shares in Eternit and completely and definitively retired from the asbestos industry.

Wanting to make Stephen Schmidheiny synonymous with the asbestos industry, means building a façade that the true asbestos magnates of the world, past and present, need in order to remain hidden, since 2/3 of the world’s countries still allow the use of asbestos, while Schmidheiny abandoned this industry 25 years ago.

Reference is made to the trial held in Turin, in which Stephen Schmidheiny who, as head of Swiss Eternit, was a shareholder of Eternit in Italy between 1976 and 1986, was sentenced to 18 years in prison and ordered pay 88 million euros in compensation for damages from the use of asbestos. What is not mentioned is that as a result of some irregularities identified in the proceedings which deprived Schmidheiny of an impartial trial and the right to a fair trial, the sentence is being appealed in Rome’s Court of Annulment. The irregularities that the court is analyzing are:

• An accusation claiming that Stephan Schmidheiny was the “de facto director” or “de facto employer,” even though he never carried out operational duties at Eternit in Italy.
• Retroactively implementing laws that were not in effect when Stephan was a shareholder of Eternit in Italy.
• The trial covers a period (1952–2008) that exceeds Stephan Schmidheiny’s association as shareholder of Eternit in Italy by decades. In 1952, Schmidheiny was only 5 years old.
• The investment made in the Eternit Italy plants to improve safety conditions during the Swiss period (1976–1986) was not taken into consideration.
• The defense was unable to access medical records which the accusations were based on nor allowed to present studies about the Swiss period.
• Eternit is the only one being charged even though, for example, another six companies manufactured with asbestos in Cassale Monferrato, the city where Eternit had one of its plants.
• The president of the Court of Appeals in Turin publicly demonized Stephan, comparing him to Nazism, violating his right to a fair and impartial trial.

Given the amount of irregularities in the legal proceedings, it would seem that the prosecutors were using the trial to fabricate the guilty party they needed instead of seeking the truth that the victims deserve.

The article mentions VIVA Trust, created in 2003, as the financial backer for Fundación Avina, suggesting that these funds would be linked to the profits generated by asbestos. Based on this incorrect information, it is implied that Fundación Avina is used “to enhance his public image.” It is absolutely wrong to link VIVA Trust to asbestos, given that it is a trust established with the stocks and investments that Stephan Schmidheiny had in Grupo Nueva, formed in 1998 by Latin American companies that are completely unattached to that industry, as it has been 20 years since Schmidheiny began to diversify his investments, and 10 years since he severed ties with the Eternit group. So, it is clear that Fundación Avina could never have been used to enhance his public image since it never received asbestos-related money nor did it ever support any activities linked to that agenda. On the other hand, VIVA Trust is one of its financial sources, but it also co-invests millions of dollars in Latin America along with other donating entities, companies and multilateral funds of international cooperation.

Further on, the article refers to remarks by Judge Ogge, the president of the tribunal, made at one of the trial’s hearings, who compared the conference in Wansee, organized by the Nazis in 1942 to discuss the deportation of the Jews, to the meeting in Neuss that Stephan Schmidheiny held in 1976, just a few months after taking over Eternit. According to the interpretation in the article, Schmidheiny, in “Neuss, before an audience of 30 people, all managers of Eternit companies in Europe,” knowing “that asbestos posed a health risk,” stated “that they should be aware of this but if other people found out they would have to shut down or take other financial measures.

Therefore, he told the directors that they had to be careful about the information they gave, to say that asbestos was not harmful, did not cause death and that the risk could be controlled.” What actually happened in Neuss was that a 29-year-old man, who had recently taken over a company with tens of thousands of employees around world, gathered the Eternit directors from all the countries where Swiss Eternit had holdings and told them that, in view of the suspected dangers of handling asbestos, they should implement the necessary measures to protect the workers’ health as well as the environment. This would be later ratified by concrete actions: the investment of millions of dollars in programs related to the safe handling of asbestos, the replacement of that mineral with another paper-based material in 1984, and his definitive separation from that industry in 1989.

In the 13 years (1976–1989) Schmidheiny was involved in the asbestos industry, his actions, as well as the various recognitions he received worldwide, demonstrate on their own that, having inherited a problem, he handed down numerous solutions.

All information regarding the business and philanthropic development of Stephan Schmidheiny will soon be available at “The Schmidheiny Story: The Sustainable Truth.”

For more information about Fundación Avina, we invite you to visit the institution’s website, www.avina.net