Georgia-Pacific

WHILE GEORGIA-Pacific Corporation's 1991 fine for tax evasion set an Atlanta, Georgia, record for corporate criminal penalties, its use of asbestos posed larger problems for this forest products company and its former customers. In October 1991, Georgia-Pacific pled guilty to tax evasion, promising to pay $21 million in fines and back taxes.

In 1984, the company had claimed a $24 million charitable contribution when it donated the 5,360-[Page 355] acre Santa Fe, New Mexico, swamp to the Suwannee River Water Management District. The value of the land was approximately $2 million.

More significant is the sum of $181 million that Georgia-Pacific paid for asbestos-related litigation in 2002. An investigative series by the company's hometown newspaper, the Atlanta Journal and Constitution, revealed that, although the company knew by 1970 about the dangers of asbestos in its popular Ready-Mix joint compound, it kept the product on the market until 1977. Asbestos, a long-fibered mineral, was essential to the compound's ability to cling to drywall. When an asbestos-free version failed to sell in 1973, Georgia-Pacific put the original version back on the market.

The dangers of asbestos had been known within the industry, though concealed from federal regulators, since the 1940s. In the early 1970s, the Occupational Safety and Health Administration (OSHA) began to demand that factories like Georgia-Pacific's dusty Akron, New York, Ready-Mix plant add ventilation and other protections for workers. In 1973, a study showed that construction workers were also at risk from asbestos. These risks were shared by home do-it-yourself remodelers as well.

The most dramatic health hazard from asbestos exposure is malignant mesothelioma, a rare cancer that attacks the lining of the lungs and heart. Initial symptoms, explains the Mesothelioma Network, may be similar to pneumonia. The Journal and Constitution notes that Lisa Pransky, who obtained a $9 million judgment from Georgia-Pacific, died within three years of diagnosis despite aggressive treatment. Like many victims, Pransky did not show symptoms until 25 years after exposure to asbestos in the Ready-Mix her father used in remodeling the family home.

More than 314,000 asbestos-related claims had been filed against Georgia-Pacific by 2002, with another 29,500 in the first quarter of 2003. The company's appeal as a legal target increased as other asbestos-using firms have avoided settlements by declaring bankruptcy. In late 2002, the company's credit rating slid toward “junk bond” status. In 2003, Georgia-Pacific confirmed rumors that it intended to shelter its other operations from liability.