On this page, we cover post-Grenfell developments in relation to Kingspan:
Kingspan’s Post Grenfell Lobbying and Fire Tests
After the Inquiry was announced in 2017, Kingspan hired two PR consulting firms to lobby Members of Parliament (MPs) to convince them that combustible insulation such as K15 was “no more dangerous than non-combustible materials when properly installed.” With the knowledge of its CEO, Kingspan designed fire tests using its competitors’ non-combustible insulation with deliberate weaknesses. In the first test, Kingspan designed the assemblies to be tested to “further weaken their performance” so they were “expected to perform badly.” However, the assemblies passed the test anyway. Kingspan then did a second test using another brand of non-combustible material and “introduced as many weak features/details as possible to ensure it has the best chance of performing poorly whilst at the same time retaining the panel modules and cavity barrier arrangement associated with all tests to date.”
This time the assemblies failed. Kingspan sent a summary of only the second, failed test to MPs investigating fire safety without disclosing that Kingspan had deliberately designed the test with weaknesses and did not mention the first, successful test.
In the 60 days before Kingspan formally withdrew the three tests from 2005 and 2014 (on October 23, 2020), five Kingspan executives exercised their executive bonus scheme share options and sold Kingspan shares for a net profit of over $10 million dollars. The executives are: Gene Murtagh, CEO; Russell Shiels, Director and now Division President of Insulated Panels North America”; Geoff Doherty, CFO; Peter Wilson, Division President of Insulated Panels until retiring December 17, 2020; Gilbert McCarthy, Managing Director of Insulated Panels.
37 percent of investors voted against the remuneration report for 2020 after Glass Lewis recommended a no vote due to concerns raised over Peter Wilson, head of the insulation boards division, being considered a “good leaver” by the company.
During or after Kingspan’s testimony during the Grenfell Tower Inquiry, at least two institutional investors divested the stock from their portfolios completely, including Guinness and WHEB. Liontrust announced a freeze on any new investment in the company. 12 other funds sold over 100,000 shares between February 22 2021 and August 22 2021, with Bailie Gifford selling over 3.5 million shares, Impax selling over 1.2 million, and AXA over 500,000 shares. In February 2021, the CEO’s brother was appointed to the Board of Directors, despite years of criticism from investors over the lack of independent board members.
Kingspan’s “Re-tests” of its Withdrawn Tests
On October 23, 2020, just days before the Inquiry began the module during which Kingspan was scheduled to testify, Kingspan withdrew three large-scale tests that had included K15. As revealed during the Inquiry, these tests had used versions of K15 that were different from the K15 sold commercially at the time, including the 2005 test and two tests from 2014.
Kingspan states on its website that: “Where questions have been raised about Kingspan’s historical BS 8414 testing, the tests have all been repeated and provided evidence to support previous fire safety claims. ” Kingspan has also stated that “anyone who relied on the 2005 BS 8414 test in respect of “new technology” K15 can now similarly rely on the replacement test which has been conducted.”
However, Kingspan’s 2019 “replacement test” was not an exact duplicate of the 2005 large-scale test. Kingspan notes that:
Due to the age of this test, a lot of details and information were hard to come by. The drawings used in the test report are limited in detail, and the test report description of the tested construction also offers little information on the full design of the test construction. As such, we decided to carry out a replacement BS 8414 test featuring an updated assembly more in line with our current testing procedure and using K15 as sold on the market today.
Notably, the 2019 test differs from the 2005 test in several ways. In particular, the external cladding is described in the original test report as cement particle board rainscreen, which Ivor Meredith, who was in charge of the test, confirmed in his testimony. Kingspan, however, asserts that this was an error and used a non-combustible fibre cement board in the 2019 test. In addition, the cavity barriers used in the 2005 test were also “unavailable in the UK market” in 2019, so Kingspan substituted a Siderise specification that it had used in previous tests. And Kingspan says the cavity barrier layout and cladding arrangement in the 2019 test mirrored the DCLG (UK Ministry’s Department of Communities and Local Government) test programme.
Given the requirement that these large-scale tests only apply for the exact set of components in the exact same configuration, it is unclear how Kingspan reached the conclusion that “anyone who relied on the 2005 BS 8414 test in respect of “new technology” K15 can now similarly rely on the replacement test which has been conducted.”
The U.K. Cladding Scandal
In the aftermath of Grenfell, the U.K.’s “Cladding Scandal” means that hundreds of thousands of tenants and owners face bills of tens of thousands of dollars in remedial work to replace insulation and cladding now identified as unsafe, and where owners have been unable to sell or re-mortgage their homes because of uncertainty about fire safety, while living in homes where they fear for their lives.
Cost estimates for resolving this crisis in the UK are estimated at over $60 billion. While the UK government has pledged over $7 billion dollars towards remediation, extensive costs are still falling on tenants and owners. In January 2021, the Secretary of State Michael Gove wrote to building developers, giving them a March deadline to commit to cover the full cost of cladding remediation on buildings over 11m. He ends his letter to developers:
I am sure you are as committed as I am to fixing a broken system. I want to work with you to deliver the programme I have set out. But I must be clear, I am prepared to take all steps necessary to make this happen, including restricting access to government funding and future procurements, the use of planning powers, the pursuit of companies through the courts and – if the industry fails to take responsibility in the way that I have set out – the imposition of a solution in law if needs be.
On January 22, 2022, Gove sent a similar letter to the Construction Products Association “to set out the contribution that cladding and insulation manufacturers will need to make to fixing the crisis.”
The range of past practices in the industry – across its approach to manufacturing, marketing and testing – has rightly been a source of huge concern to Parliament and the public. Without prejudicing the results of the Grenfell Inquiry, there is no doubt that the documentary evidence that has been published relating to the culture and practices of major cladding and insulation manufacturers has been extremely alarming…
There are a number of cladding and insulation companies whose products or services have contributed to the need for remediation of 11m+ buildings on fire safety grounds… A new deal must include a clear commitment from the sector that they agree to make financial contributions in this year and in subsequent years as we have already asked developers to do. The total contribution from the cladding and insulation sector must represent a significant portion of the total remediation costs, caused by the dangerous products sold by some of your members. The current estimated cost to remediate unsafe cladding on 11-18m and over 18m buildings is £4bn and £5.1bn respectively…
But I must be clear, I am prepared to do whatever it takes to deliver our objective including using our regulatory framework to limit any culpable company from operating and selling products in this country in the future; and I will pursue those individuals and firms liable for building defects who are unwilling to do the right thing now.
Meanwhile, the crisis is growing to include other types of buildings (e.g., schools), other products and other countries. Total liability and costs for all the parties involved are still unknown.