Stephan Schmidheiny is a Swiss entrepreneur and a global leader in venture capital and social investment whose innovative approaches have changed the way philanthropy is done. His visionary ideas have helped promote corporate social responsibility and the triple bottom line philosophy since 1976, the year that, at 29 years of age, he assumed leadership of the family business, the Swiss Eternit Group (SEG). He led the company until the late 1980s, when he shifted his focus to become a venture capital investor in a number of different sectors. He was at the forefront of the global sustainable development agenda when it first gained worldwide traction in 1990. He also founded a number of global philanthropic organizations, including the World Business Council for Sustainable Development (1995), FUNDES International (1984), Avina (1994), and MarViva (2002).
A few months after taking the reins of Eternit when he was 29 years old, Schmidheiny called a meeting with the company’s managers to encourage them to implement measures for the “safe use of asbestos.” These measures were designed to mitigate safety risks in the handling and transport of asbestos. As a result, SEG invested millions of dollars into making its industrial facilities safe, developing environmental stewardship programs, and, beginning in 1976, conducting research to find alternative materials to replace asbestos in the production of fiber-cement sheets.
Under Schmidheiny’s leadership, by 1984 Eternit had eliminated asbestos from the manufacturing process for the majority of its products. In this manner, Schmidheiny was significantly ahead of rest of the industry, as the use of asbestos as a raw material was still widespread at the time. Five years later, he exited the industry entirely. This was over a decade before the EU prohibited asbestos in 2005 and before the World Health Organization (WHO) and the International Labor Organization (ILO) carried out global campaigns to prohibit the processing of asbestos in 2006. Even today, asbestos is only prohibited in one-third of countries around the world. According to the World Health Organization (WHO), 125 million people worldwide are still being exposed to asbestos at their places of work.
The significant investment required to ensure safe manufacturing processes and to replace asbestos with an alternative reduced the company’s competitiveness, as most other manufacturers were still producing asbestos-based products at minimal cost. These losses significantly diminished Schmidheiny’s assets. Throughout the 1980s, he gradually sold off all of his shares in the Swiss Eternit Group. In 1989, he embarked on a new business path and became a pioneer in venture capital investment. He invested in industries and companies that urgently needed to reinvent themselves, such as Swiss watchmaking, which at the time faced substantial threats from Japanese technology. As a result, Schmidheiny managed to rebuild his assets by modernizing companies and industries that, by traditional investment standards, had no future.
The charges are concerning the period between 1976 and 1986. In 1976, Max Schmidheiny handed leadership of the Swiss Eternit Group (SEG) over to his son, Stephan Schmidheiny, who was 29 years old at the time. SEG was a shareholder in several local Eternit companies in different countries, including the one in Italy, Eternit SpA. This company was founded by an Italian engineer in 1907, nearly 70 years before Stephan Schmidheiny assumed leadership of SEG. In 1986, Eternit SpA filed for bankruptcy, and its plants were sold off to different owners by the time Italy prohibited asbestos in 1992. Even though Stephan never visited the Eternit SpA plants that were operating decades before and years after he was a shareholder, he is charged with being personally responsible for the harmful effects caused by these plants.
The first Eternit trial made its way through the Italian court system between 2009 and 2014. The prosecutor in Turin, Raffaele Guariniello, charged Stephan Schmidheiny with intentionally causing a disaster (article 435 of Italian criminal code) and for noncompliance with required safety measures (article 437 of Italian criminal code). The defense maintained throughout the proceedings that Schmidheiny’s right to an impartial trial had been violated, according to 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 same convention, given that during the time period in question, there was no law against asbestos in Italy and the plants themselves went above and beyond the safety measures that were the industry standard at the time.
The case came to a close in 2014 when Stephan Schmidheiny was acquitted by the Supreme Court of Cassation, Italy’s highest court, which observed that the statute of limitations had expired before the trial began in 2009. The Court of Cassation concluded that criminal proceedings should have never taken place, so the case did not warrant further deliberation.
In spite of the acquittal by the Court of Cassation, in late 2014 Raffaele Guariniello presented new charges against Stephan Schmidheiny. This trial became known as “Eternit Encore” and “Eternit Trial 2.0” because the prosecutor presented the same charges as in the first trial, with almost no changes except for modifying the criminal charge to “intentional homicide.” This was in clear 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 under its jurisdiction and, therefore, referred the cases concerning the plants in Casale Monferrato, Naples-Bagnoli, and Rubiera to the corresponding prosecutors to carry out their own investigations.
With respect to the Cavagnolo case, the court ruled that there was insufficient legal grounds for the “intentional homicide” charge. The prosecutor in Turin appealed this decision before the Italian Court of Cassation, which ruled in December 2017 (issuing the ruling in writing in May 2018) to uphold the lower court’s decision in the preliminary hearings. The Court of Cassation stated explicitly that the argument of intentionality was legally unjustifiable.
There are four court cases that are currently underway in the cities of Turin, Casale Monferrato, Naples, and Rubiera. Updates on these cases can be found in the “Judicial process” section of this website.
