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Execs Charged Over Asbestos Cover-Up

08/02/2005 04:50 PM - Reuters - James Vicini

WR Grace & Co and seven current or former executives were charged on Monday with conspiring to endanger residents in Libby, Montana, and concealing the health risks from asbestos-contaminated vermiculite, the US Justice Department said.

According to the indictment returned by a federal grand jury in Montana, Grace spread the asbestos throughout the community to such locations as commercial buildings and schools, including an outdoor ice skating rink, school running tracks and baseball fields.

The 10-count indictment charges the defendants with conspiracy, clean-air violations, wire fraud and obstruction of justice involving asbestos-related diseases linked to its former vermiculite mining and processing operations.

Grace, named in all 10 counts, could face fines of hundreds of millions of dollars, a Justice Department official said.

Under the law, a company can be fined for up to twice the gain for activities associated with its criminal conduct, the official said. The indictment said Grace reaped more than US$140 million in profits from asbestos-contaminated vermiculite.

Grace said in a statement that it "categorically denies any criminal wrongdoing," and that it was supporting the long-term health care of the citizens of Libby.

A specialty chemicals company currently in bankruptcy proceedings, Grace operated the vermiculite mine from 1963 to 1990, and it continued processing operations until 1992.

The vermiculite, with uses that included insulation, was contaminated with a form of asbestos known as tremolite.

According to the indictment, the conspiracy began in 1976 and continued until 2002. The conspirators knowingly released asbestos into the air, placing at risk families of Grace employees and area residents.

"It was a purpose of the conspiracy to increase profits and avoid liability by misleading the government and preventing the government from using its authorities to protect against risks to human health and the environment," the indictment said.

About 1,200 Libby residents so far have been identified as having asbestos-related lung abnormalities as a result of being exposed to the asbestos from the mine, the 49-page indictment stated.

Libby's population totals about 8,000 people. The indictment said 70 percent of those with the abnormalities did not work in the mine.

The indictment said Libby's death rate from asbestosis, a scarring of the lungs, is 40 to 80 times higher than expected when compared to rates for Montana and the United States.

It said the lung cancer rate is about 30 percent higher for the town compared with rates in the state and the United States.

Named in the indictment were Alan Stringer, a manager at the Libby Mine; Henry Eschenbach, a health and safety expert at WR Grace's Industrial Chemicals Group (ICG); and Jack Wolter a vice-president of WR Grace's  Construction Products Division (CPD).

Also named were William McCaig a maintenance superintendent and operations manager at the mine; Robert Bettacchi, a president of the CPD unit; Mario Favorito, legal counsel to WR Grace's ICG unit and Robert Walsh, with positions that included executive vice president of Grace Specialty Chemicals.

Eschenbach declined to comment. Efforts to reach the other defendants were not immediately successful.