The Editor's Page -- W.R. Grace's Disgrace

Is your company keeping secrets from -- or worse, lying to -- its customers? If so, you might want to take a strong leadership position and remind the secretive, deceptive types of a vital lesson most mothers drilled into their children: Secrets and lies will always come back to haunt you. As if we haven't learned this lesson repeatedly, most notably through the examples of two notorious U.S. Presidents and the tobacco industry, we're learning the lesson anew thanks to W.R. Grace & Co. The New York Times, in an early July report, cited Grace confidential documents that show the company went to extraordinary lengths in the '70s and '80s to keep information about the asbestos content of a fireproofing product from reaching its customers. The company knew its Monokote product contained a small amount of tremolite, a little-known variant of asbestos; it knew that customers would stop buying the product if they discovered its asbestos content; and, after calculating the odds of potential product liability lawsuits, it followed a strategy of nondisclosure and misinformation. Grace justified -- and continues to justify -- its deception by saying it broke no law and met all government regulations, which is true. Full disclosure of contaminants did not become law until the early 1990s. Further, Grace helped convince the EPA to set asbestos limits at 1%, just above amounts found in Monokote, by claiming that the danger of small amounts had not been proven. However, just because it's legal doesn't make it right. Likewise, notifying the government of contamination does not absolve you from notifying your customers. Grace also defends its actions by arguing that small amounts of asbestos content posed no health risk. While company executives might believe that statement with all their hearts, the real truth is that nobody knows for certain at what level asbestos is dangerous. The company called off research to determine safe levels. More troubling, Grace cannot certify that the amount of tremolite in Monokote met safe levels. Though Grace can cite some lab results showing very tiny amounts of tremolite, other results in their possession documented far higher asbestos levels. But companies should not make paternalistic decisions for their customers -- give them the information and let them decide. This strategy must have seemed the right thing to do at the time. Clearly it was great for the bottom line, catapulting Grace's fireproofing business from an also-ran to a market leader. Now the strategy most likely will add to the bevy of lawsuits that have pushed Grace into bankruptcy. (No lawsuits about the particular product have been filed, but information regarding it is only now coming to light.) As for the executives who made the decision? I wonder how they can sleep at night, knowing their success was built not only upon lies, but upon lives -- those cut short or impaired by disease caused by exposure to the company's products. Patricia Panchak is IW's editor-in-chief. She is based in Cleveland.