W.R. Grace and Co. and seven of its senior employees conspired for decades to hide the cancer risk posed by asbestos at its vermiculite mine near Libby, Mont...

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MISSOULA, Mont. – W.R. Grace and Co. and seven of its senior employees conspired for decades to hide the cancer risk posed by asbestos at its vermiculite mine near Libby, Mont., and intentionally exposed mine workers and hundreds of townspeople to illness and death, a federal grand jury charged today.

A 10-count indictment accuses top Grace executives and managers of intentionally keeping secret numerous studies spelling out the risk that cancer-causing tremolite asbestos posed to customers, employees and Libby residents. In Libby alone, the asbestos contamination is blamed for the deaths of about 200 residents and sickness in hundreds more.

The indictment also accused Grace and Alan Stringer, former manager of the now-closed mine, of trying to obstruct efforts by the Environmental Protection Agency to investigate asbestos contamination in the Libby area beginning in 1999. Additional charges in the indictment include wire fraud and violating the federal Clean Air Act.

“A human and environmental tragedy has occurred in Libby. This prosecution seeks to hold Grace and some of its executives responsible for the misconduct alleged in this indictment,” Bill Mercer, the U.S. attorney for Montana, said at a news conference in Missoula.

Lori Hanson, a special agent with the Environmental Protection Agency, called the allegations against Grace and its executives “one of the most significant environmental indictments in our history.”

Grace, in a written statement released today, said it had not been served with a copy of the indictment and couldn’t comment at length, but added that it “categorically denies any criminal wrongdoing.” The company, based in Columbia, Md., disclosed last October that it was under investigation.

“We are surprised by the government’s methods and disappointed by its determination to bring these allegations,” the company said. “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.”

Asbestos contamination in Libby came to light in 1999 after national news reports first linked the pollution from a nearby vermiculite mine to the deaths and illnesses of area residents. The vermiculite ore was used in a number of household products, most notably a common home insulation. The ore, however, contained naturally occurring tremolite asbestos, a carcinogen.

The EPA began its investigation shortly after news of the asbestos-related deaths became public. Since then, the agency declared the area a Superfund site and has spent more than $55 million on cleanup so far.

Grace has appealed a federal judge’s ruling that it must repay the EPA that entire amount for cleanup. That dispute is ongoing.

In addition to the company and Stringer, those named in the indictment are Henry Eschenbach, former health official for a Grace subsidiary; Jack Wolter, a former executive for Grace’s construction products division; William McCaig, former general manager of the Libby mine; Robert Bettacchi, a senior vice president of Grace; O. Mario Favorito, chief legal counsel for Grace; and Robert Walsh, former Grace vice president.

The company could face a fine of up to $280 million, twice the amount of after-tax profits the government alleges W.R. Grace realized from the Libby mine, according to the Justice Department.

If convicted, Stringer could be sentenced to as many as 70 years in prison, while Wolter and Bettacchi face maximum prison terms of 55 years. The other defendants could get five years in prison.

Les Skramstad, a Libby resident and former mine worker who was diagnosed with asbestosis nine years ago, said he was pleased criminal charges had finally been filed.

“This wasn’t something that happened to us. This was something that was done to us,” said Skramstad, who attended today’s news conference.

Skramstad, 68, said he worked in the mine for 21/2 years and believes he not only contracted asbestosis there, but brought home asbestos fibers that sickened his wife and two children. All of them now have asbestosis, Skramstad said.

“They should have to pay,” Skramstad said of the defendants. “They will never have to pay like we did, because it won’t cost them their lives.”

The indictment alleges that the defendants not only kept secret the health dangers posed by the vermiculite mined at Libby, they hampered federal government efforts to protect the public from such risks.

As early as 1976, the company knew of lung problems among its employees at the mine, according to the indictment.

Grace executives also had reports or studies warning of the dangers of asbestos vermiculite exposure in 1977, 1980, 1981 and 1982, the indictment alleged. At one point, it said, Eschenbach responded to one of the studies by writing in a memo: “Our major problem is death from respiratory cancer. This is no surprise.”

Despite having that information, the indictment said, Grace officials told the EPA in 1983 that they knew of nothing to indicate their products posed a substantial threat to human health.

The company, knowing of the dangers from its product, provided vermiculite for a junior high school running track and as a base for an ice rink, the indictment said. It said Grace also sold or leased some of its contaminated properties to local residents for homes and businesses, for baseball fields and for city use.

When the EPA arrived in 1999, company officials lied about providing vermiculite insulation to local residents for their homes and businesses and failed to reveal the vermiculite was used on the school’s running track, the Justice Department said.

As late as April 2002, in response to the EPA declaring a public health emergency in Libby, the company still insisted its vermiculite was not a risk to the environment and human health, the indictment said.