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Proving criminal intent in handling of asbestos products won't be easy


MONDAY'S federal indictment of W.R. Grace & Co. is unprecedented and potentially devastating to the Columbia-based company, but the government could have a hard time putting Grace officials behind bars.

This is the first attempt in the United States to hold a manufacturer of asbestos-containing products criminally liable for health and environmental harm, experts say.

More than three decades of asbestos-linked deaths, litigation and bankruptcies are behind us, but until now nobody at an asbestos purveyor has been threatened with prison.

"This is really extraordinary that it's taken this long for a case to occur," says Barry Castleman, an environmental consultant and co-author of Asbestos: Medical and Legal Aspects, a book on the corporate response to the asbestos crisis.

W.R. Grace and seven current or former executives were indicted by a federal grand jury in Missoula, Mont., on charges including obstruction of justice and knowingly exposing workers at its Libby, Mont., mine and town residents to asbestos in the company's vermiculite, used for insulation.

At least 1,200 people have gotten sick of asbestos-related disease, the Justice Department says. Many have died.

Grace and its executives deny wrongdoing and, based on previous statements, will probably argue that they knew asbestos was dangerous but thought their controls were adequate. The government will try to prove otherwise, marshaling quarter-century-old documents that prosecutors say show attempts to hide asbestos' dangers.

White-collar crime is difficult to prosecute, the conviction of accountant Arthur Andersen notwithstanding. For evidence, see the ups and downs in recent securities-fraud cases against Tyco's Dennis Kozlowski and investment banker Frank Quattrone.

Pursuing criminal penalties against corporations whose products endanger workers and consumers is just as challenging and even more unusual.

Philip Morris was never criminally charged with making killer cigarettes. Ford was never criminally charged for making the deadly, exploding Pinto. Nor was A.H. Robins, which made the Dalkon Shield contraceptive device, linked to fatal infections and infertility. And neither was Manville Corp., the asbestos manufacturer whose executives allegedly suppressed medical documentation of asbestos hazards and whose products indisputably killed thousands.

Those companies were besieged, chastened and, in the latter two cases, driven to bankruptcy by civil product-liability lawsuits. But they were not indicted.

U.S. asbestos-related criminal cases relate mainly to companies mishandling asbestos made by somebody else. Careless asbestos removal by small-time, "rip and run" contractors sometimes leads to criminal penalties, for example. In the 1990s, Consolidated Edison paid a $2 million criminal fine relating to accidental asbestos release in New York City.

The Libby case will revolve around obscure details such as asbestos air samples and Grace executives' state of mind during the 1980s and early 1990s, when workers and Libby residents were being exposed. Criminal intent is crucial; a jury must find beyond a reasonable doubt that bosses knew or should have known they were doing wrong.

That's why such cases are very difficult to prove, said Rena Steinzor, who teaches environmental law at the University of Maryland School of Law.

"Judges are reluctant to apply to someone that kind of responsibility when they didn't actually write down on a piece of paper, 'I know I'm doing wrong and I don't care,' " Steinzor said.

Like many criminal prosecutions, this one might focus on an alleged cover-up as much as anything else. There seems to be no shortage of exhibits, including an internal 1979 memo discussing the proposal of a Libby doctor, Richard Irons, to study workers' health.

"Irons is turning the screw," said the memo, which was cited in Monday's indictment. "We either play the game his way or he's going to blow the whistle."

Allegations of hiding evidence of harmful products are easier for juries to grasp than somebody's state of mind decades ago.

"A lot of times in environmental violations the public understands that nobody can be perfect, and people will often forgive you for making a mistake," said Steven P. Solow, former chief of the Justice Department's environmental crimes section and now at Hunton & Williams in Washington.

"But you're in a much harder position if the government can prove that there were efforts to conceal or lie or hide information."

Investment banker Frank Quattrone was prosecuted on a charge of obstruction of justice, not securities fraud, as stated in Jay Hancock's Wednesday column in the Business section.
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