CHICAGO, OCT. 20 -- A federal jury today ordered W.R. Grace & Co. to pay $100 million to the Federal Deposit Insurance Corp., which had contended in a lawsuit that Grace fraudulently secured a loan from Continental Bank.
The award, including $25 million in compensatory damages and $75 million in punitive damages, "represents the community's objection to unethical conduct by large corporations," said FDIC counsel William Rattner.
"Grace will appeal," company spokesman Fred Bona said in a telephone interview from Grace corporate headquarters in New York. "Grace believes ... it will be successful in overturning the verdict, which the company believes is contrary to the facts and applicable law."
The FDIC sued Grace in July 1984, over a $75 million loan made in July 1980 by Continental Illinois National Bank to a subsidiary of W.R. Grace, a chemical, energy and retailing conglomerate.
Rattner said the subsidiary, Grace Petroleum Corp., sought the loan to purchase two natural-gas fields in Mississippi, but withheld from Continental information that one of the fields was "worthless."
The loan was a nonrecourse loan, meaning Continental could seek repayment only through proceeds from natural gas fields, Rattner said.
The FDIC became involved in the lawsuit because it took over the loan as partial payment for its assistance in a $4.5 billion rescue package that pulled Continental Bank from the brink of bankruptcy.