NYTimes.com Article: Criminal Inquiry Under Way at Large Pipe Manufactur

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Corporate violtions of health and safety continue unabated. They are largely 
low-priority issues in the contemporary psyche oversaturated with warmaking. 

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Criminal Inquiry Under Way at Large Pipe Manufacturer

May 15, 2003
By DAVID BARSTOW with LOWELL BERGMAN 




 

McWane Inc., a major manufacturer of cast-iron pipes and
one of the nation's most persistent violators of workplace
safety and environmental laws, is the target of a federal
criminal investigation, according to law enforcement
officials and current and former employees who have been
questioned in the inquiry. 

The investigation began in January, the same month the
company was the subject of articles by The New York Times
and a documentary on the PBS television program
"Frontline." They described how McWane, a private
conglomerate owned by one of Alabama's wealthiest families
and employing 5,000 workers, had recorded more than 4,600
injuries since 1995 while also illegally polluting the air
and water in several states where it owns foundries. 

Several former McWane employees interviewed for the series
said they had since been contacted by Justice Department
prosecutors and by criminal investigators from the
Environmental Protection Agency. Last week, a senior
investigator described the inquiry as "very significant,
substantial and nationwide." 

The investigation - encompassing McWane's safety and health
record as well as its failure to protect the environment -
is especially significant because it represents an unusual
effort by the federal government to build a case against a
major corporation that for years has avoided serious
criminal sanctions despite a lengthy record of infractions.


The company has been cited for more than 400 safety
violations and 450 environmental violations since 1995.
While the company has paid roughly $10 million in fines and
penalties, no McWane official has ever gone to jail for
these violations. Instead, a disjointed and fragmented
regulatory apparatus repeatedly failed to detect, much less
end, patterns of misconduct. 

The investigation, which comes as members of Congress and
regulators consider tougher laws for dealing with
persistent violators, involves some of the Justice
Department's most senior environmental prosecutors in
Washington working with assistant United States attorneys
in districts around the country. 

The inquiry also includes at least a half-dozen full-time
investigators from the E.P.A., with assistance from another
half-dozen investigators in field offices in states where
McWane, which is based in Birmingham, Ala., has plants. The
investigation has also relied on assistance from the
federal Occupational Safety and Health Administration,
which is separately continuing a series of safety
inspections at five McWane plants, a senior investigator
said. 

G. Ruffner Page, president of McWane, said in a statement
last night that the company had not been contacted by any
state or federal investigators. "If we are contacted,
however, we will give them our full cooperation, as is our
policy and practice," he said. "Furthermore, we are
confident that any such investigation would reveal the
significant progress we have made in recent years on
safety, health and environmental compliance." 

A Justice Department spokesman declined to confirm or deny
the existence of any investigation. 

In recent months, McWane has invested millions of dollars
in new safety and environmental equipment. Senior managers
have received more safety training, and the company has
hired consultants to help it improve safety programs. Some
managers have been reassigned or removed. 

Still, current and former McWane workers in New Jersey,
Alabama and Texas said investigators had asked them about
allegations of illegal dumping, of illegal air emissions
and of efforts to mislead regulators, and about workers who
were disciplined or fired after reporting on-the-job
injuries. 

Investigators also appear to be developing new information,
seeking interviews with current and former employees who
were not interviewed for the original articles in The
Times. In recent weeks, for example, E.P.A. investigators
have sought to question a former McWane executive who, in a
series of recent interviews with The Times, said he was
fired after alerting two of McWane's highest executives to
what he says were unreported environmental crimes at a
foundry in Provo, Utah. 

The former executive, Franklin Marold, said that in late
1999 and early 2000 he told McWane's president, Mr. Page,
and McWane's general counsel, James M. Proctor II, that the
Pacific States Cast Iron Pipe Company, the McWane plant in
Utah, was doctoring air emission tests. 

Mr. Marold said he told them the falsified tests were meant
to fool state environmental regulators into thinking that
the plant was not releasing more smog and air pollution
than its operating permit allowed. Mr. Marold, who has
filed a wrongful-termination suit against McWane, said he
also told the executives that the plant at times improperly
diverted fouled industrial wastewater into a nearby
wetlands area. 

"I'm not a tree hugger, but I'll draw a line," he said. "To
blatantly do something willfully - that's wrong. I have a
problem with that." 

At the time, Mr. Marold, a 16-year McWane employee, had
just been promoted to assistant general manager at Pacific
States, a job that made him the No. 2 manager at the plant
and gave him responsibility for assuring compliance with
environmental regulations. Mr. Marold said he appealed to
Mr. Proctor and then Mr. Page because his immediate boss,
the general manager of Pacific States, had not taken action
when he brought the matter to his attention. 

Mr. Marold said that even though he supplied documents that
supported his claims, Mr. Page and Mr. Proctor made no
effort to correct the problems. Instead, he asserted, Mr.
Page told him to let the matter drop. 

Months later, in October 2000, Mr. Marold said, he was
abruptly fired by Mr. Page, who flew out to Provo on a
company jet to deliver the news. He said Mr. Page told him,
"Son, you're a round peg in a square hole." 

Mr. Marold said he had rejected a settlement offer "in the
high six figures" because it would have required him not to
discuss his years at McWane with anyone, including
government officials. "They were trying to buy my silence,"
he said. 

Mr. Page, in his statement, said that Mr. Marold's
allegations "were thoroughly investigated and found to be
without merit." He said Mr. Marold was fired for "failing
to properly perform his employment duties." 

Mr. Marold, he said, tried "to extract a substantial
monetary settlement from the company in exchange for an
agreement to refrain from contacts with the news media." 

"We refused to pay him what he demanded, despite the
knowledge that he would talk with you about his unwarranted
accusations," Mr. Page wrote. 

But a former engineer at Pacific States said in a recent
interview that Mr. Marold's allegations about the plant
were accurate. He recalled a conversation with McWane's
lawyers in 2001 when he was questioned about Mr. Marold's
claims. "Every day we run, we are breaking the law," the
engineer said he told them. 

The engineer said the plant had regularly "fudged"
smokestack test results to Utah air quality regulators. "We
would stack the deck for the test," he recalled. 

The engineer, who said he had not been questioned by
federal investigators, also said that from 1996 until 2001,
Pacific States regularly used its cupola, the furnace in
the foundry used to melt iron, to burn hazardous waste -
primarily old paint - in violation of environmental
regulations. He said he and others also knew about
contaminated wastewater that was allowed to flow into
wetlands. "It had been going on for as long as I was
there," he recalled. 

Environmental regulators in Utah said they were not aware
of any allegations that Pacific States was deceiving them
about its air and water emissions. "If a company
intentionally wants to falsify records or produce more than
they are allowed to produce or burn a lot of hazardous
waste, then there is no way we can catch them unless an
insider decides to report it," said Robert W. Sirrine, a
compliance inspector with the state division of air
quality. 

The plant, he said, has long been a subject of smoke and
odor complaints from neighbors. But, he added, McWane has
spent millions of dollars in recent years on upgrading
pollution control equipment there. 

Indeed, in recent interviews, workers at several McWane
plants said that since January, life on the shop floor had
changed sharply. Supervisors are starting to put safety and
environmental compliance over production quotas, and
general conditions are improving, they said. 

"Now we get gloves for free," said a worker at a McWane
plant in Phillipsburg, N.J. Workers used to be charged 97
cents a pair, he said. 

At Kennedy Valve, a McWane plant in Elmira, N.Y., workers
agreed that operations were finally starting to reflect
written corporate policies. Fear of the strict chain of
command and once-ubiquitous threats of disciplinary
"tickets" has dissipated, they said. 

Now, safety and the environment are grounds for refusing
orders, they said. "You wouldn't believe the change,"
Thomas Dininny, who has worked at the plant for 28 years,
said. "Supervisors who tell people to do unsafe things will
be disciplined or terminated." 

This month, members of a Congressional subcommittee
overseeing OSHA asked if fines were enough to deter
companies like McWane. At a hearing, John L. Henshaw, the
agency's administrator, said it had written new policies to
crack down on persistent violators. 

http://www.nytimes.com/2003/05/15/national/15PIPE.html?ex=1054026135&ei=1&en=2ad6bbf4377c48a8


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