Grand Jury Indictment: W.R. Grace Lied About Dangers of Asbestos Exposure

Feb. 8, 2005
The federal government is trying to bring the hammer down on a company accused of thumbing its nose at environmental laws and worker safety for decades.

Officials from Columbia, Md.-based W.R. Grace & Co., which operated a vermiculite mine in Libby, Mont., from 1963 to 1990, were well-aware that the asbestos-tainted vermiculate products they were profiting from were endangering the lives of mine workers, customers and residents of Libby and the surrounding communities, according to an indictment handed down by a federal grand jury in Montana on Feb. 7.

Approximately 1,200 residents in the Libby area -- 70 percent of whom did not work at the Libby Mine -- have asbestos-related health abnormalities, according to the indictment.

'Our major problem is death from respiratory cancer'

The 10-count indictment includes charges that, as far back as the 1970s, executives from W.R. Grace commissioned what turned out to be several damning internal studies of the toxic nature of tremolite asbestos -- a vermiculite by-product -- and then conspired to conceal the results from the government, industrial customers, workers and the public.

According to the indictment, W.R. Grace in 1982 asked Harvard University's School of Public Health to conduct a mortality study of the Libby Mine over a 30-year span, and the study results prompted former company official Henry Eschenbach to state in a memo: "Our major problem is death from respiratory cancer. This is no surprise."

The indictment accuses W.R. Grace of obstructing EPA attempts to clean up the Libby Mine operations (four counts of obstruction of justice); of knowingly endangering the public and violating the Clean Air Act (three counts); and of masterminding wire fraud schemes in order to avoid liability for its asbestos-laden company properties (two counts of wire fraud).

As part of the indictment's first count -- conspiracy -- the indictment alleges that W.R. Grace's machinations included:

  • An employee recommending that the company destroy copies of a brochure for Libby employees detailing the dangers of asbestos exposure in the workplace and the threat of take-home dust;
  • The company donating asbestos-contaminated mill tailings (a waste product of the milling process) to the community for civic purposes -- such as the building of an outdoor ice skating rink and junior and senior high school tracks -- and then failing to completely remove the asbestos-containing materials when it was deemed they were a public health threat;
  • W.R. Grace selling its former processing plant to a local couple but failing to warn the couple of the health hazards of asbestos on the property; and
  • The circulation of a company memo that recommended, as one possible tactic to stall a proposed NIOSH study of the Libby Mine, that W.R. Grace "Be slow, review things extensively and contribute to delay."

Seven executives named

In addition to W.R. Grace, the indictment also names:

  • Robert Bettacchi, who, according to the W.R. Grace corporate Web site, currently is a senior vice president and president of the company's performance chemicals group;
  • Eschenbach, an industrial hygienist for the company's industrial chemicals group from 1971 to 1977 and director of health, safety and toxicology for the industrial chemicals group for nearly 20 years;
  • O. Mario Favorito, former corporate legal counsel for the industrial chemicals group and current chief group counsel and assistant secretary for W.R. Grace;
  • William McCaig, whose various positions included general manager of operations at the Libby Mine from 1979 to 1988;
  • Alan Stringer, the former supervisor and general manager of operations at the Libby Mine as well as the company representative for EPA's Superfund clean-up efforts;
  • Robert Walsh, a former senior vice president with the company, among other positions; and
  • Jack Wolter, a former vice president of mining and engineering for the construction products division, among other positions.

According to the indictment, W.R. Grace "enjoyed at least $140 million in after-tax profits from its mining operations in Libby." If convicted, W.R. Grace could face fines of up to twice that amount or twice the losses suffered by victims, according to the Department of Justice.

W.R. Grace and the aforementioned executives also could face up to 15 years in prison on each public endangerment charge and up to 5 years in prison on each of the conspiracy and obstruction charges, if convicted.

Mine area now a Superfund site

Vermiculite is a mineral that was used in common household products such as attic insulation, fireproofing materials and masonry fill as well as an additive to potting soils and fertilizers. Gold miners first discovered Vermiculite ore in the mountains northeast of Libby in the late 1800s, according to background material in the indictment.

Mining began at the site in about 1919 and continued until W.R. Grace shut down the Libby mine in 1990, according to an article published in OCCUPATIONAL HAZARDS in 2000. The indictment says W.R. Grace continued vermiculite processing operations at the Libby Mine and a screening plant about 4 miles from the Libby Mine until 1992.

The vermiculite deposits at the Libby Mine were contaminated with a form of asbestos called tremolite, according to the indictment. Asbestos is regulated under the Clean Air Act as a hazardous air pollutant and is a recognized human carcinogen known to cause lung cancer; asbestosis, a progressive and sometimes fatal disease that destroys the human lung's ability to absorb oxygen; and mesothelioma, a rare and lethal form of cancer.

Asbestos, W.R. Grace and Libby, Mont., were the focus of national news reports in the late 1990s when nearly 200 deaths in the Libby area were thought to have been linked to asbestos exposure. When EPA sent investigators to the Libby area in 1999, W.R. Grace and its officials "continued to mislead and obstruct the government by not disclosing, as they were required to do by federal law, the true nature and extent of the asbestos contamination."

EPA later declared the Libby Mine and other related W.R. Grace properties a Superfund site. When EPA tried to gain access to the former Libby vermiculite mine and processing plant to clean up the asbestos contamination, W.R. Grace told EPA it had acquired all the stock of Kootenai Development Co. -- which had bought the area comprising the Libby Mine from W.R. Grace in 1994 -- and then denied EPA Superfund responders access to company property, according to the indictment.

As of 2001, EPA had incurred approximately $55 million in clean-up costs, according to a news release from EPA and the Department of Justice.

W.R. Grace 'categorically denies' charges

In a joint release, officials from EPA and the Department of Justice said they want to convey the message that the agencies will pursue corporate environmental scofflaws.

"We will not tolerate criminal conduct that is detrimental to the environment and human health," said Thomas Sansonetti, assistant attorney general for the Justice Department's Environment and Natural Resources Division. "We look forward to working with the District of Montana's United States Attorney's Office to prosecute this case."

Meanwhile, W.R. Grace issued a statement the day of the grand jury indictment blasting government officials for publicizing the indictment without providing a copy to W.R. Grace.

"However, based on news reports of the government's charges, Grace categorically denies any criminal wrongdoing," the statements says. "We are surprised by the government's methods and disappointed by its determination to bring these allegations. And though court rules prohibit us from commenting on the merits of the government's charges, we look forward to setting the record straight in a court of law."

W.R. Grace currently has more than 6,000 employees in nearly 40 countries and has annual sales of approximately $2 billion, according to the news release from the company.

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