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W. R. Grace Indicted: 7 executives also charged with conspiring to release asbestos

Indicted executive O. Mario Favorito, Grace’s chief legal counsel, worked out of the Whittemore Avenue, Cambridge, MA plant.

CNN NEWS > Midsized Companies

W.R. Grace indicted over asbestos claims
Seven executives have also been charged with conspiring to release asbestos; Firm denies wrongdoing.

February 7, 2005: 6:33 PM EST

WASHINGTON (CNN) – W.R. Grace & Co. and seven of the corporation’s executives were indicted Monday for engaging in a long-running conspiracy to “knowingly release” hazardous asbestos fibers that placed the entire town of Libby, Montana, “in imminent danger of death or serious bodily injury,” the Justice Department announced.

The indictment says for many years company officials knew, and tried to hide, the dangers to the community of 8,000 residents from its hazardous mining operation. Prosecutors say 1,200 residents of Libby have suffered lung diseases and related pleural abnormalities from exposure to tremolite asbestos. The document says more than 20 town residents suffered “an extremely rare and fatal form of cancer in humans known as mesothelioma.”

The indictments stem from W.R. Grace’s ownership of the Libby mine, which produced asbestos-contaminated vermiculite.

In a statement, the company “categorically denied” any criminal wrongdoing, “As a company and as individuals, we believe that one serious illness or lost life is one too many.” The company also said the government distributed the indictment to the media without providing it with a copy.

The federal indictment says the corporation conspired “to conceal and misrepresent the hazardous nature” of the tainted ore. The indictment also accuses the officials of conspiring “to increase profits and avoid liability by misleading the government” as it investigated reports of a possible health threat.

The 10-count indictment — returned by a federal grand jury in Missoula — also charges W.R. Grace or other named defendants in two counts of “knowing endangerment” under the Clean Air Act, three counts of wire fraud, and four counts of obstruction of justice.

Convictions could bring criminal fines for the corporation up to $280 million dollars, twice the value of the profits from its Montana mine. Individual defendants, if convicted, could face sentences from five years to 70 years in prison.

Federal prosecutors have scheduled a news conference in Missoula Monday afternoon to announce details of the indictment.

The alleged conspiracy existed from 1976, when, according to the indictment, there was early evidence of a health threat, until 2002, when an official allegedly provided “false and misleading information to the United States Environmental Protection Agency.”

A Justice Department official, who asked not to be identified, said the most immediate threat was to the employees and their families exposed to the asbestos fibers on their clothing. Some industrial customers had also become exposed, and studies documented the health danger to the whole town.

The indictment says 70 percent of the 1,200 people who suffered asbestos-related disease were not former employees at the Libby Mine. “Individuals have been identified with asbestos-related disease whose only exposure to asbestos has been through asbestos containing vermiculite from the Libby Mine located throughout the community,” the indictment says.

Government officials said three of the seven defendants indicted in the case are still employed by W.R. Grace. They are Alan Stringer, Robert Bettacchi, and Mario Favorito.

The four former employees named in the case are Henry Eschenbach, Jack Wolter, William McCaig, and Robert Walsh.

Based on the government’s charges, Grace said it categorically denies any criminal wrongdoing.