November 27, 2004
W.R. Grace & Co. Facing Environmental Charges
W.R. Grace & Co., a large chemicals company that filed for bankruptcy due to asbestos liabilities, disclosed in an SEC filing that it is the target of a federal grand jury investigation related to its vermiculite mining and processing activities in Libby, Montana. According to the company's 8-K filing with the SEC:
Grace understands that the investigation is at an advanced stage and that it is likely to be indicted during the first quarter of 2005, unless a resolution of this matter can be reached with the government within such timeframe. Several current and former senior level employees associated with Grace's construction products business also have been named as targets of the investigation. On November 15, 2004 the U.S. Bankruptcy Court granted Grace's request to advance legal and defense costs to the employees, subject to a reimbursement obligation if it is later determined that the employees did not meet the standards for indemnification set forth under state corporate law.
Under the Department of Justice's Principles of Federal Prosecution of Business Organizations, a company's payment of the legal fees of its employees, at least when they are not required by law to be paid by the organization, can be a basis for finding that the company did not cooperate with the federal investigation. (ph)