W.R. Grace Indicted in Libby Asbestos Deaths

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W.R. Grace Indicted in Libby Asbestos Deaths

By Andrew Schneider

St. Louis Post-Dispatch

 

Tuesday 08 February 2005

 

Mine company and seven executives face criminal charges.

 

MISSOULA, Mont. -- W.R. Grace & Co. and seven of its current

or former executives have been indicted on federal charges that they

knowingly put their workers and the public in danger through exposure

to vermiculite ore contaminated with asbestos from the company's mine

in Libby, Mont.

 

Hundreds of miners, their family members and townsfolk have

died and at least 1,200 have been sickened from exposure to the

asbestos-containing ore. The health effects also threaten workers,

their families and residents everywhere the ore was shipped, including

Seattle, and people living in millions of homes nationwide where it

was used as insulation.

 

Yesterday, on the steps of the county courthouse here, U.S.

Attorney Bill Mercer announced the 10-count indictment, alleging

conspiracy, knowing endangerment, obstruction of justice and wire fraud.

 

" A human and environmental tragedy has occurred, " he said.

" This prosecution seeks to hold Grace and its executives responsible. "

 

" This is one of the most significant criminal indictments for

environmental crime in our history, " said Lori Hanson, special agent

in charge of the Environmental Protection Agency's environmental crime

section in Denver.

 

In a statement released for Grace by a public-relations firm,

the company " categorically denies any criminal wrongdoing. "

 

Grace criticized the government for releasing the indictment

before providing a copy to the company. " We are surprised by the

government's methods and disappointed by its determination to bring

these allegations ... . We look forward to setting the record straight. "

 

Federal environmental officials began examining the hazards in

Libby after Nov. 19, 1999, when the Seattle Post-Intelligencer began

publishing a series of stories about what the government has called

" the nation's biggest environmental disaster. " Within three days of

the P-I's first report, an EPA emergency team arrived in the tiny

northwestern Montana town.

 

Present at the announcement yesterday were Libby victims

Lester and Norita Skramstad and Gayla Benefield.

 

Lester Skramstad has asbestosis, as does his wife, Norita, and

two of their children. He spoke softly but forcefully, struggling for

breath to launch his words into the wind on a blustery winter

afternoon. " I've waited a long time for this, " he said. " It's a great

day to be alive. "

 

If found guilty, the individual defendants face from five to

15 years in prison on each count, which for some of the executives

could be as much as 70 years.

 

Grace could be fined up to twice the profits from its alleged

criminal acts or twice the losses suffered by victims. According to

the indictments, Grace made more than $140 million in after-tax

profits from the Libby mine, which would mean a fine of up to $280

million. Alternatively, the court could fine the company twice what it

computes the loss to be from more than a thousand Libby victims. In

addition, the court could order restitution for the victims.

 

" 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

workers and the public, " said Thomas Skinner, EPA's acting assistant

administrator for enforcement, yesterday.

 

The executives charged are Alan Stringer, formerly general

manager of the Libby mine and Grace's representative during the

government's Superfund cleanup; Henry Eschenbach, formerly director of

health, safety and toxicology in Grace's industrial chemical group;

Jack Wolter, formerly Grace vice president and general manager of its

construction products division; Bill McCaig, also formerly general

manager of the mine; Robert Bettacchi, formerly president of the

construction products division and senior vice president of Grace; O.

Mario Favorito, former Grace general counsel; and Robert Walsh,

formerly a Grace senior vice president.

 

The 49-page indictment accuses Grace of knowingly releasing

asbestos into the air, placing miners, their families and townspeople

at risk, and of defrauding the government by obstructing the efforts

of various agencies including the EPA, increasing profits and avoiding

liability for damages by doing so.

 

P-I's investigation

 

Tens of thousands of pages of internal Grace documents and

court papers were the basis of scores of stories in the P-I on Libby

and the deadly ore that Grace shipped throughout the world.

 

Those documents show years of extensive communication among

Grace's top health, marketing and legal managers and mine officials in

Libby about concealing the danger of asbestos in the ore and consumer

products that were made from it.

 

They discussed methods to keep federal investigators from

studying the health of the miners, the potential harm to Grace sales

if asbestos warnings were posted on its products, and the effort to

mask the hazard of working with the contaminated ore.

 

" The prosecution cannot eliminate the death and disease in

Libby, " said John Heberling, a lawyer with McGarvey, Heberling,

Sullivan and McGarvey. " But there is comfort in the hope that criminal

convictions will say to corporate America ... managers will be held

criminally accountable if they lie and deny and watch workers die. "

 

For years, the Kalispell, Mont., firm has been fighting for

damages from Grace on behalf of the families of the dead and the dying

from Libby.

 

Mine's Huge Production

 

Opened in 1913, the mine is six miles from Libby. Grace bought

it in 1963 and closed it in 1990. In its heyday, the mine produced 80

percent of the world's vermiculite. The company still operates smaller

vermiculite mines in South Carolina.

 

Vermiculite, a mineral similar to mica, expands when heated

into featherweight pieces that have been used commercially for decades

in attic and wall insulation, wallboard, fireproofing, and plant

nursery and forestry products. It was also used in scores of consumer

products, such as lawn and garden supplies and cat litter.

 

Exposure to the tremolite asbestos fibers, which contaminate

the vermiculite ore, has caused hundreds of cases of asbestosis, lung

cancer and mesothelioma in Libby and an untold number at hundreds of

other sites across North America where the ore was processed.

 

Criminal investigators and lawyers from the EPA, the Internal

Revenue Service and the U.S. Attorney's offices in Montana often put

in 12- to 15-hour days while preparing the case. Investigators and

lawyers from the Justice Department and the EPA's headquarters also

assisted.

 

The haste was required because prosecutors were up against a

five-year statute of limitation, based on the arrival of the first

federal team in Libby after the P-I stories. They gained a three-month

extension of that limitation.

 

A Troubled Past

 

The EPA said that over the years it had filed several

complaints against Grace over the company's environmental practices.

The only previous criminal charge against the Columbia, Md.-based

corporation was in the mid-'80s. Grace was indicted on two counts of

lying to the agency about the quantity of hazardous material used in

its packaging plant in Woburn, Mass.

 

In 1988, the company pleaded guilty to one count and was fined

$10,000, the maximum at that time. The charges were brought after

Grace and another company were sued after being accused of illegally

dumping toxic chemicals, contaminating two wells and, some believe,

resulting in the deaths of five children from leukemia. Grace paid the

families $8 million to settle the suits. The book and movie " A Civil

Action " were based on the Woburn case.

 

Grace, which produces construction materials, building

materials and packaging, filed for Chapter 11 bankruptcy protection in

2001 because of the " sharply increasing number of asbestos claims, "

Paul Norris, Grace's chairman and CEO, said at the time.

 

In May 2002, the Justice Department intervened in Grace's

bankruptcy, the first time it had entered such a case, alleging that

before Grace filed for Chapter 11, it concealed money in new companies

it bought. Justice Department lawyers said Grace's action was a

" fraudulent transfer " of money to protect itself from civil suits.

 

In November of that year, just before the trial was to begin,

the St. Louis Post-Dispatch reported that the companies returned

almost $1 billion to the bankruptcy judges holding Grace's assets.

 

Grace is far from out of business. Norris said the company has

annual sales of about $2 billion, more than 6,000 employees and

operations in nearly 40 countries.

 

Mercer refused comment on whether there would be more

indictments from other locations where Grace had operations. Hanson

said she had been discussing the investigation with her counterparts

in EPA regions throughout the country.

 

Libby victim Benefield said yesterday that as she watched the

announcement of the indictments, her thoughts were with her parents,

Perley and Margaret Vatland, both of whom died of asbestosis. She wore

on her coat a costume-jewelry pin her mother, who sold Avon products,

bought from Avon for herself.

 

" Somewhere today they're smiling, " she said, fingering the

pin. " I just know it. "

 

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