The company behind Grenfell Tower’s flammable cladding gave more compensation to its shareholders than to victims of the disaster, an investigation has found.
Arconic, which made and sold the cladding panels found to be the “primary cause” of the rapid spread of the Grenfell fire, paid $74m to its shareholders for economic loss they incurred after the blaze.
In contrast, the company paid $43m to the estates of the fire’s victims and survivors after a lengthy legal battle. Across both payouts, all but $2m was covered by Arconic’s insurers.
The findings are part of a new report by thinktank Common Wealth and financial investigations group FIND, which calls for stronger corporate accountability laws in England and Wales to ensure future misconduct does not go “unpunished and undeterred”.
“Arconic successfully avoided consequential accountability for its role in the fire through a series of ordinary business practices,” the report said.
Grenfell United, which represents the bereaved and survivors of the fire, said the investigation showed how “corporate structures and legal systems have allowed those responsible to move on while our community continues to live with the consequences”.
“Grenfell was not just a tragedy – it was a preventable disaster. We hope these findings help drive the legal and political changes needed to ensure no company can evade responsibility in this way again,” they said.
A total of 72 people, including 18 children, died as a result of the fire in the 24-storey Grenfell Tower in June 2017.
Arconic sold Reynobond PE, the flammable aluminium composite material (ACM) used to clad the tower. The inquiry into the blaze found the company “deliberately and dishonestly concealed from the market” the true danger of the product in the form in which it was used on Grenfell.
Arconic has repeatedly denied any wrongdoing, and a criminal investigation by the Metropolitan police has yet to bring charges against any individuals or companies in relation to the fire.
The report revealed how the Reynobond PE used on the tower made up less than 1% of annual Reynobond sales at the time, and said there is no evidence Arconic has tried to trace the rest of the product it has sold.
It had been selling Reynobond globally for at least 20 years before the Grenfell fire, and previously said it sold 12.75m square metres of it in total.
The report urged Arconic to publicly reveal where the rest of the material was sold, and said it should be debarred from public contracts in England until it does so.
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Common Wealth researcher and the report’s author, Leela Jadhav, said the findings “outline a near-total failure of legal mechanisms to hold corporations accountable”.
It also called for stronger laws in England to punish corporate misconduct, saying the country lags far behind other countries in doing this.
Its recommendations included making punitive damages available in England and Wales in cases where corporate illegality is implicated in death. Currently, these damages are awarded very rarely and only in narrowly defined circumstances.
Courts should be given the power to direct a portion of shareholder settlement recoveries to victim funds where third-party harm is identified, it said, and insurance companies should conduct human rights and environmental due diligence to ensure they do not “facilitate and encourage” misconduct.
The UK government has committed a maximum of £5.1bn to cladding removal, with £600m of public money put into an ACM Cladding Remediation Fund. The report said, “an order of punitive damages against Arconic could cover these expenses, at no public cost”.
Arconic declined to comment.
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