W.R. Grace Execs Face Indictment

ASBESTOS

A federal grand jury in Montana has issued a criminal indictment against W.R. Grace and seven current and former Grace executives for knowingly exposing residents of Libby, Mont., to asbestos and concealing the danger. This is the first time a major company's executives have faced jail terms for asbestos charges.

If found guilty, the company could be fined twice the $140 million profits made in the mining operations or twice the losses suffered by the victims. The Grace executives could be sentenced to five to 70 years in prison if convicted of all 10 charges in the indictment.

According to the Justice Department, asbestos contamination from the vermiculite mine operations run by W.R. Grace from 1963 until 1990 sickened at least 1,200 residents in the Libby area. Beginning in the 1970s, the indictment states, Grace's internal studies indicated health problems from asbestos at its vermiculite mining operation, but Grace concealed that information from the community. The vermiculite was contaminated with a form of asbestos called tremolite.

Grace and the seven executives are also accused of obstructing EPA's Superfund cleanup operations at the mine and in the town of Libby by not disclosing the extent of the asbestos contamination. EPA designated the Libby area as a Superfund site in 2000 and, by 2002, had spent $55 million on cleanup.

The indictment includes other serious charges. It alleges that Grace supplied contaminated vermiculite tailings to Libby public schools for use on running tracks and that it leased an asbestos-contaminated facility for youth baseball games. It allowed workers to leave the plant site with asbestos-covered clothes, and it gave Libby residents waste vermiculite for use in their gardens. When the National Institute of Occupational Safety & Health attempted to study the health conditions at the Libby mine in the 1980s, Grace officials obstructed the research, the indictment charges.

"This criminal indictment is intended to send a clear message. We will pursue corporations and senior managers who knowingly disregard environmental laws and jeopardize the health and welfare of the workers and public," says Thomas V. Skinner, EPA's acting assistant administrator for enforcement and compliance assurance.

W.R. Grace says court rules prohibit it from commenting specifically on the government's charges, but in a statement on its website, the company "categorically denies any criminal wrongdoing."

This indictment will not have as sweeping an effect on Grace as it would have on a company that is solvent, says Walter K. Olson, a senior fellow at the Manhattan Institute, a conservative think tank. "The fact is that the company is bankrupt," he explains. What the case will do is absorb a great deal of management time and dilute Grace's efforts to deal with its bankruptcy, he says.

Thousands of individuals had already sued Grace over asbestos, Olson points out, and this indictment might encourage a few more lawsuits from people who had worked for or lived around a Grace factory.

Asbestos causes asbestosis, which destroys the lung's ability to absorb oxygen, and lung cancer, especially mesothelioma, a rare but aggressive disease. The indictment says the rate of asbestosis in the Libby population is 40 to 80 times higher than the average for the U.S.