The Multinational Monitor


C O R P O R A T E   C R I M E   &   V I O L E N C E


An Industry's Lethal Cover-Up

by Russell Mokhiber

Franklin Brooks was a star football player at Georgia Tech during the 1950s. He led his squad to four bowl games including the 1956 Sugar Bowl where he was voted most valuable player. When school was out during the summer, Brooks worked in an insulation plant where he handled asbestos boards and other asbestos materials.

Twenty years after leaving Georgia Tech, Brooks returned as an assistant football coach. But at age 42, mesothelioma, a rare form of cancer, began to eat away at his lungs and shorten his breath.

"I can't walk fast or walk up steps," Brooks told a reporter in 1978, a few weeks before he died of asbestos-induced cancer. "If I do, I get out of breath. That's the indication that things are not as good as they were. A shortness of breath and severe chest pain."

"I have two children," said Brooks, "one youngster twenty and a daughter sixteen. And I'm not sure they realize how serious it is."

The manufacturers of asbestos, however, realized the serious health dangers posed by asbestos early in the game, before Brooks was chasing the pigskin at Georgia Tech and before he inhaled asbestos fibers at his summer job. A series of documents released to the public during congressional hearings in 1978, indicate that Manville, formerly JohnsManville, the nation's largest asbestos manufacturer, and other asbestos companies covered up and failed to warn millions of Americans of the dangers associated with the fire-proof, indestructible, insulating fiber they called "the magic mineral."

Asbestos disease, asbestosis, was reported for the first time in Britain in 1908, almost 30 years before Franklin Brooks was born. By 1918, the U.S. government, in issuing its first report on the substance, urged further investigation into the health aspects of asbestos. As a result, U.S. and Canadian insurance companies decided to stop selling life insurance to those who worked with asbestos. Ten years later, in 1928, the Journal of the American Medical Association reported on a young woman who died of asbestosis. Manville conducted its own study in 1949, finding 534 asbestos workers, out of the 780 tested, with lung changes. The 1950s and 1960s saw a flood of reports warning of the health dangers associated with asbestos.

Despite these well-documented dangers, Manville allowed the use of asbestos to proliferate until it became an integral part of the marketplace and of people's lives. Today millions of Americans continue to be exposed to asbestos. From schools to homes, to drum brake linings, to office buildings, to high school classrooms, to open piles of asbestos wastes, to home appliances, to drinking water supplies, asbestos is almost everywhere.

Manville's attitude toward safety was perhaps best revealed in testimony given by the company's medical director under oath in 1976. When asked whether he had ever advised Manville to place warning labels on its asbestos products, Kenneth W. Smith said: the company "had to take into consideration the effects of everything they did, and if the applications of a caution label identifying a product as hazardous would cut out sales, there would be serious financial implications." They had to "judge the necessity of the label v. the consequences of placing the label on the product," he said.

The industry not only refused to put warning labels on its products, it went to great lengths to ensure that neither its workers nor the public knew that asbestos needed a warning label. The industry's cover-up came to light in 1978 when internal industry documents were released at congressional hearings. The documents, called the "Asbestos Pentagon Papers," were reviewed by South Carolina Judge James Price and were so persuasive that the judge ordered a new trial for a deceased asbestos insulation worker whose claim had earlier been dismissed. In reopening the case, the judge said that the internal documents reflected "a conscious effort by the industry in the 1930s to downplay or arguably suppress the dissemination of information to employees and the public for fear of promotion of lawsuits."

Although the industry stuck to its line that it wasn't fully cognizant of the asbestos hazard until 1964, the Asbestos Papers clearly show that by the time the British had documented the occupational ha7ard of asbestos dust inhalation in 1932, U.S. companies were aware of the problem. In fact, the documents showed that Manville had settled 11 compensation cases filed by asbestos workers out of court in the 1930s.

Also among the papers was a letter dated September 25, 1935 from the editor of the industry's trade journal, Asbestos to Sumner Simpson, the president of one of the largest asbestos firms in the United States, Raybestos Manhattan. The editor wanted permission to publish an article about the hazards of asbestos. "Always you have requested that for certain obvious reasons we publish nothing and naturally your wishes have been respected," the editor wrote.

Simpson wrote to his asbestos colleague Vandiver Brown, secretary of Manville, and while praising the magazine for "not reprinting the English articles," he said that "the less said about asbestos the better off we are." Brown agreed with Simpson and suggested that if an article had to be published, it should reflect "American data rather than English."

Brown's trust in the "American data" was, from his point of view, well placed. The "American data" referred to a study begun in 1929 by Anthony Lanza and sponsored by RaybestosManhattan, Manville, and the Metropolitan Life Insurance Company, the insurance carrier for both asbestos giants. Brown, other industry officials, and their lawyers had crucial ~, editorial control over the Lanza study. In 1934, Lanza submitted his galleys to Brown. Brown later wrote to Lanza indicating that Lanza had omitted a sentence appearing in an earlier draft, namely: "Clinically from this study, it [asbestosis] appeared to be of a type milder than silicosis."

This sentence was essential as Manville's New Jersey attorney, George S. Hobart, understood well. Hobart was worried about then pending legislation that would include asbestosis as a compensable disease. "It would be helpful, for financial reasons," Hobart wrote to Brown, "to have an official report to show that there is substantial difference between asbestosis and silicosis."

Brown forwarded Hobart's suggestions to Lanza and asked that "all of the favorable aspects of the survey be included." Lanza was amenable to these suggestions. While Lanza found that 67 of the 126 workers whom he examined suffered from asbestosis, these damning numbers never found their way into his published study. Lanza also concluded, per instruction, that asbestosis was milder than silicosis.

For the next 40 years, the industry would continue to cover up, suppress and lie about relevant data on asbestosis. Although the use of asbestos for molded insulation was finally banned in 1975, the toll of asbestosis is far from over, says Dr. Irving Selikoff, of the ML Sinai School of Medicine in New York City. Selikoff, who has done pathbreaking work linking asbestos to cancer and asbestosis, estimates that 240,000 of the million Americans who work or have worked with asbestos will die from asbestos-related cancer within the next 30 years - that's 8,000 per year or about one every hour - unless a major breakthrough is made in early diagnosis and treatment.

In addition to the one million people who work directly with asbestos, however, there are 10 million workers in the construction and shipbuilding industries who have worked with asbestos, and another million mechanics who repair asbestoslined brakes, and hundreds of thousands of maintenance, repair, renovation and demolition workers who work on buildings stuffed with 24.8 million tons of asbestos. And when buildings are demolished, the asbestos goes flying into the atmosphere. Asbestos is also in such consumer products as electric french fryers, electric blankets, dishwashers, popcorn poppers, and curling irons and in the drinking water of cities such as Boston, Philadelphia, Atlanta and San Francisco.

Although asbestos is pervasive, there are and were alternative materials capable of substituting for asbestos. Barry Castleman, an environmental consultant and author of the comprehensive review, Asbestos: Medical and Legal Aspects, argues that asbestos-free calcium silicate compositions, now widely used, "appear to be based essentially on technology that was available long before asbestos was banned in molded insulation in the 1970s."

By early 1984, in courthouses throughout the country, more than 25,500 personal injury lawsuits were pending charging the asbestos companies with inflicting hundreds of millions of dollars worth of damages on an unwary populace, with 500 additional lawsuits being filed every month.

In addition to the thousands of individual claims, in 1983, school districts, cities, and states began filing "rip and replace" lawsuits seeking to force the major asbestos companies to find and cover up or remove asbestos from schools, offices, prisons, hospitals, universities, and other public buildings, or to pay for such tasks. The estimated costs of a nationwide asbestos clean up boggle the mind. One plaintiffs lawyer estimated that to survey Massachusetts' 5,000 public buildings would cost $3.5 million with an additional $190 million to clean it up. By 1984, more than 300 property lawsuits had been filed nationwide, with the number growing every week.

On August 26, 1982, Manville, in a highly publicized legal maneuver, filed for bankruptcy in federal court. The move immediately froze the lawsuits and forced asbestos victims to stand in line with other Manville creditors.

The victims charged Manville with using the bankruptcy process to duck its responsibilities for injuries it had caused. In a petition filed in the U.S. District Court for the Southern District of New York, asbestosis victims' attorneys alleged that the Manville bankruptcy petition was marred by tactics of questionable morality and legality and should be thrown out of court. The victims charged that Manville had lied in order to keep key documents secret. By claiming that Manville's former general counsel, Vandiver Brown, was deceased, the victims said the company hoped to keep documents in which Brown acknowledged the health hazards of asbestos from being admitted as evidence. Brown was later discovered alive in Scotland by an asbestos victim's attorney.

The victims also charged that Manville attempted to suppress studies on the health hazards of asbestos in the 1930s and 1940s and, instead, created its own favorable study of asbestos. And, they charged that in 1981, a year before Manville filed for bankruptcy, the corporation carried out a corporate reorganization in order to try to insulate most of the company's operations from asbestos liability. The victims charged the company with avoiding its usual accountants, and going instead to Price Waterhouse in order to get a favorable opinion on the necessity of establishing a reserve account. This brought about an immediate default on the company's outstanding debt, thus making Manville hypothetically eligible for bankruptcy and allowing it to shield itself from the 16,500 personal injury lawsuits then on file.

At the time of Manville's decision to file for bankruptcy, Frederick L. Pundsack, the corporation's president argued that such an action "would be wrong" because the firm was "a viable, ongoing business enterprise" that was becoming "stronger than ever." For taking this stand, Pundsack was encouraged to retire early. He resigned from Manville less than one week before it filed for bankruptcy.

Some asbestos victims appealed Manville's reorganization plan on the grounds that the plan sought to discharge Manville not only from its liabilities to those who had claims against the company at the time of the filing for bankruptcy, but also from those who would develop asbestos-related health conditions in the future, and who would present claims against the company after the reorganization had been completed.

After three years, and much wrangling, in August 1985, Manville agreed to pay thousands of claimants $2.5 billion. The agreement called on Manville to set up a fund to which shareholders would surrender half the value of their stock and the company would give up much of its projected earnings over the next 25 years.


Sales $1.8 billion
Assets $2.3 billion
Net Income $45 million
Stockholder Equity $878 million
Employees 21,000
Rnk in Sales 198
Headquarters Denver, CO
CEO Tom Stephens
Products Residential and commercial insulation
and roofing materials

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