Grace, officials indicted in Mont.

Md. company is charged over asbestos exposure

February 08, 2005|By Meredith Cohn and Stacey Hirsh | Meredith Cohn and Stacey Hirsh,SUN STAFF

W.R. Grace & Co. and seven current and former executives were indicted yesterday by a federal grand jury on charges of knowingly exposing residents of a small Montana town to asbestos that has made at least 1,200 of them sick, according to the U.S. Justice Department.

The Columbia-based company could face hundreds of millions of dollars in fines and the executives could be sentenced to five to 70 years in prison if convicted of all charges in the 10-count indictment, which was handed up in Missoula, Mont.

In addition to endangering residents of Libby, where it once operated the world's largest vermiculite mine, Grace and its officials are also accused of concealing information about the health effects of its mining operations, obstructing the government's cleanup efforts and wire fraud.

"A human and environmental tragedy has occurred in Libby," said Montana's U.S. Attorney William W. Mercer.

Grace and the executives deny any criminal wrongdoing, the company said yesterday in a statement.

The $1.8 billion company, which employs 1,200 in Maryland and 6,000 worldwide, sought bankruptcy protection in 2001 to shield itself from more than 100,000 asbestos-related lawsuits. Officials said in November that the grand jury indictment was expected.

"The individuals who make up the global Grace team are the best in the world," the statement said. "They care deeply about our customers, about their co-workers and about the communities in which they live and raise their families."

Grace operated the Libby mine from 1963 to 1990. It produced vermiculite, which was used in common commercial products such as attic insulation, fireproofing and masonry fill.

The government says the vermiculite was contaminated with a form of asbestos called tremolite. Asbestos, banned in most products since 1989, is regulated under the federal Clean Air Act as a hazardous air pollutant, and studies have shown that it causes life-threatening diseases including lung cancer.

The indictment alleges that Grace discovered in the late 1970s that material from its mine was toxic but that it, nevertheless, allowed workers to leave the mine covered in asbestos dust and also allowed residents to take waste vermiculite for use in their gardens.

Grace also provided mine material for the surfaces of running tracks at Libby's high school and junior high school, and for the foundation of an outdoor ice rink at its elementary school, according to the indictment.

The indictment, citing memos from company officials, contends that officials knew of the danger of the mine and its materials but concealed it.

In 1979, a doctor in Libby, Richard Irons, wrote a letter to Grace proposing that the company study mine workers' health, but the company declined. In an internal memo, a company official wrote about the study, "Irons is turning the screw. ... We either play the game his way or he's going to blow the whistle."

Another memo written in 1982 by a company official said, "Our major problem is death from respiratory cancer. This is no surprise."

The company, the indictment states, closed the mine in the early 1990s and sold the properties to local buyers without disclosing the contamination. One of the properties was used as a residence and commercial nursery.

The Environmental Protection Agency responded to reports of asbestos contamination in 1999 and declared the mine a Superfund site. By 2001, the agency had spent about $55 million on the cleanup. Two years later, a federal judge ordered that Grace repay the full amount.

Grace said it has spent millions on its own cleaning up Libby and the surrounding area, now home to about 9,000 people.

In addition to Grace, the indictment names as defendants three current employees: Alan R. Stringer, the former Libby mine supervisor and now a Grace representative for the EPA cleanup effort; Robert J. Bettacchi, a former official in the construction products division and now president of the division; and O. Mario Favorito, a former corporate legal counsel and now a Grace assistant secretary and chief group counsel.

Former employees Henry A. Eschenbach, Jack W. Wolter, William J. McCaig and Robert C. Walsh were also indicted.

David Benefield, who lives in Libby and has lost several family members to asbestos-related diseases, said the indictments give vindication to some residents who have been fighting Grace for the past several years.

"I think it's going to give some closure to some of the town members, especially the ones that are suffering with the disease," said Benefield, who said that he and his wife suffer from asbestos-related illnesses.

Benefield said Libby was a company town, and some residents were reluctant to turn their backs on Grace because it lent such strong economic support to their community. Half the town didn't believe the company would do anything harmful to them, he said.

But now he estimates that the contaminated ice rink endangered about 1,000 children who went to the school.

"Some of the teachers said that when the kids came into the school that stuff would be all over their coats and even in their pockets," Benefield said. "Pretty nasty."

A lawyer with McGarvey, Heberling, Sullivan and McGarvey, the firm that represents 550 individuals who claim injuries or deaths in their families from exposure to asbestos from the Grace mine and mill, said it's been a long battle.

"We've contended for some time that Grace's ruthless policy of putting profits over people have injured hundreds of innocent people," Roger Sullivan, said. "Now we'll find out if Grace's senior employees have violated any criminal laws."

An arraignment date in Missoula has not been set.

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