ST. LOUIS -- Shares of Monsanto Co. (MON) are down nearly 3% Wednesday after a Washington Post article said the company discharged toxic waste into a creek and dumped millions of pounds of PCBs in open-pit landfills in an Alabama town.
The Tuesday article said Monsanto knew PCBs were harmful but hid the dumping, now banned, into landfills in Anniston, Ala., and routinely discharging toxic waste into a west Anniston creek. A lawsuit by 3,600 plaintiffs, or one of every nine Anniston residents, is scheduled for trial Monday.
The newspaper said Monsanto documents, some marked "Confidential: Read and Destroy," were obtained from plaintiffs' attorneys and the Environmental Working Group. Monsanto and Solutia Inc. (SOI), its chemical spinoff, have spent $40 million on cleanup efforts and $80 million on legal settlements, the paper said.
Monsanto found out in 1966 that fish submerged in the creek resurfaced within 10 seconds, shedding skin and spurting blood, but the company didn't tell anyone, the newspaper said. Studies conducted in following years showed harmful effects of PCBs but the company, while knowing of the studies, opted not to take action, the article said. Even the company's own tests on PCBs weren't good.
Solutia officials say that Monsanto made mistakes but also noted that PCBs were once lauded for preventing fires and explosions in electrical equipment, the newspaper said. Monsanto stopped making PCBs in 1977, two years before a national ban, the paper said. The Anniston plant now makes a chemical used in Tylenol, and it hasn't reported a toxic release in four years, the paper said.
Shares of Monsanto were recently trading at $32.85, down 2.8%, or 95 cents on volume of 717,700 compared with average daily volume of 312,000. Solutia shares are down 6.1%, or 86 cents, to $13.16 on volume of 461,700 compared with average daily volume of 314,880.
The information concerning PCBs, Monsanto, Solutia and the Anniston site have been in the public domain for a long time, said Credit Suisse First Boston analyst William Young. Solutia has disclosed the information in its filings with the Securities and Exchange Commission and so the Washington Post article doesn't add anything other than "shock value," Young said.
The situation in Anniston is a Solutia issue and not a Monsanto one because Monsanto spun off the businesses involved in the matter to Solutia when Solutia, a chemical company, was spun off of Monsanto in 1997, Monsanto spokesman Dallas Meneely said. He declined to comment on the article or the pending trial.
Officials at Solutia couldn't be reached for comment. A message on the voice mail of Liesl Livingston, Solutia's director of investor relations, said the company is unable to comment on the Washington Post article at this time.
In its 10-K filed on March 8, 2001, Solutia said that Monsanto manufactured PCBs at the Anniston plant from 1935 to 1971, and that Solutia is defending a number of actions in state and federal court in Alabama related to the alleged emission of PCBs and another allegedly hazardous materials from the plant. Resolution of the cases may have a material adverse effect on Solutia's net income in a given year, although it's impossible to estimate the range or amount of any such liability, Solutia said in the filing.
In Solutia's 10-Q filing on Oct. 26, 2001, the company said that it and Monsanto were told on Aug. 2, 2001 that they were being sued by 1,984 plaintiffs who allegedly live or lived in the areas near the Anniston plant, who regularly visited the area and were allegedly exposed to PCBs from the plant. Solutia said in the filing that it's defending the action.
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