Documents tabled at an inquiry into a compensation fund for people with diseases induced by asbestos have shown that only months after the fund was established by an asbestos manufacturer the fund's chairman feared that it had a massive shortfall.

In February 2001 James Hardie Industries established a non-profit trust, the Medical Research and Compensation Foundation, with $A293m (£120m; $220m; €180m) of assets to cover the company's liabilities for asbestos induced diseases. Eight months after the company established the foundation it moved its head office to the Netherlands.

At the first hearing of the inquiry initiated …