W.R. Grace Expects Indictment over Montana Asbestos Contamination
W.R. Grace & Co., the Columbia, Md.-based chemical maker pushed into bankruptcy by asbestos lawsuits, said yesterday that it expects to be indicted by a federal grand jury in connection with asbestos contamination in Libby, Mont., where it once mined vermiculite that contained the hazardous fibers.
The company had disclosed in October that it was the target of a government investigation involving possible obstruction of federal proceedings, violations of federal environmental laws and conspiring with others to violate federal environmental laws. Grace, which employs 1,200 in Maryland, operated the mine in northwest Montana from 1963 to 1990.
In a Securities and Exchange Commission filing yesterday, the company said the investigation has reached an "advanced stage" and that Grace is "likely to be indicted during the first quarter of 2005" unless it can reach a settlement with the government.
"By designating Grace as a 'target' of the investigation, the government is asserting that it has substantial evidence linking the company to the commission of a crime," the company said in its SEC filing.
Greg Euston, a spokesman for the company in New York, did not return phone calls yesterday and William W. Mercer, U.S. Attorney for the District of Montana, said it was the agency's policy not to comment on investigations.
Several current and former senior-level employees associated with Grace's construction products business are among the targets of the investigation. On Nov. 15, the U.S. Bankruptcy Court in Wilmington, Del., granted the company permission to advance legal and defense costs to the targeted employees, yesterday's SEC filing said.
Grace filed for bankruptcy protection in 2001 after being hit with thousands of personal injury lawsuits related to asbestos-containing products it sold over the years. The material has been linked to lung cancer and other lung ailments.
The company filed a bankruptcy reorganization plan Nov. 16 that seeks to limit its asbestos liabilities to $1.61 billion. Most of the money would go into a trust that would be used to pay claims from victims of asbestos poisoning. The court has yet to rule on the proposal.
The company also is petitioning the court for a six-month extension of its exclusive control over its bankruptcy reorganization. In a motion filed Tuesday, the company said it needed more time to negotiate with creditors, who would be prevented from filing competing reorganization plans if the motion is granted. A hearing is scheduled for Jan. 24.
The company said yesterday that it is unable to assess what impact an indictment or conviction resulting from the Montana investigation will have on the company's bankruptcy proceedings.
The company has said that vermiculite mined in Libby was used in insulation, fire-proofing and potting soil. The Environmental Protection Agency has declared Libby a Superfund site and a federal judge has ordered the company to pay $54.5 million to help with removing contaminated soil from the town of a few thousand residents.
The mine has been linked to illness in hundreds of Libby miners, their relatives and other residents of the area around the mine. More than a hundred Libby residents are among those who have sued Grace for damages.
Source: Knight Ridder/Tribune Business News