March 31, 1995

If directors of W. R. Grace & Company thought they were putting the past behind them when they released a cryptic statement announcing the unexpected resignation of J. P. Bolduc, the chief executive, on March 2, they have had a rude awakening. Yesterday, the company was forced to admit that Mr. Bolduc was let go after longstanding allegations of sexual harassment had come to the attention of the board. With that, what was already one of the most bizarre corporate dramas in memory got worse. Grace now must answer questions about its past management practices, its future leadership, its legal liabilities, the candor of its directors and its ability to satisfy the powerful institutional investors who hold the bulk of its stock.

A new rail transfer station here designed to cut travel time for commuters to New York City will receive $101 million in Federal money. Supporters say the station will save riders of the Bergen and Main lines 30 minutes going to and from Manhattan.

Fire Department officials said yesterday that the blaze that destroyed one of the two main commercial buildings at the Fulton Fish Market on Wednesday had been deliberately set. And they described the noontime arson as a crude but ambitious act: the floor of a hallway in the building was soaked with a flammable liquid, and the structure's entire sprinkler system was intentionally shut off. "I don't know if we can characterize it as professional," said Howard Safir, the New York City Fire Commissioner. "But it was very effective."

Six men were under arrest yesterday in the fatal shooting of an unarmed, off-duty prison guard earlier this month. The guard was caught in the crossfire of a gang shootout as he tried to break up a fistfight.

To friends and Montclair neighbors, Earl Bethel was a model citizen, a 19-year-old college student who had never been in trouble. Then he was arrested earlier this month on charges of shooting a West Caldwell woman and stealing her car. Now he has been charged with a second carjacking and shooting that took place last year outside a Union go-go bar. The police said the female employee he tried to shoot escaped by ramming his car. LAWRENCE VAN GELDER

Investigators said that the chemical warehouse fire here last weekend that forced the evacuation of nearby homes was caused not by arson but by spontaneous combustion -- with an assist from baseball bats. Prosecutors said that the problem was the way workers at the Causeway Distributors warehouse handled ammonium persulfate and sodium persulfate.

FULTON FIRE: ARSON IS OBVIOUS . . . Fire Department officials said the blaze that destroyed one of the two main commercial buildings at the Fulton Fish Market on Wednesday had been deliberately set. They said hallway floor had been soaked with a flammable liquid and the sprinklers had been intentionally shut off. A1. . . . BUT PRIME SUSPECTS ARE NOT As the search began for the arsonists, law enforcement officials said there was disagreement over whether to focus on the Mafia or on individuals who might have had a personal motive for setting the fire. B4.

A dozen years ago, Timothy Zaccardo was a clean-cut teen-ager, the son of a security officer, who like many working-class young men in the suburbs hoped to become a New York City police officer. In 1985, he realized his dream and earned a place on the midnight shift in a South Bronx precinct, the 48th. For years, he seemed to have the best of two worlds: the comfortable surroundings of his Rockland County hometown and the challenge and rush of a police beat in the East Tremont section of the Bronx.

It all began with a routine E-mail message: Staff workers of the Senate Judiciary Committee were invited to attend a briefing on the latest version of a Republican bill that would bring far-reaching changes in the nation's health and environmental laws. But the aides, mostly Democrats, were dumbfounded at the scene that unfolded on Wednesday in the committee's hearing room. Seated at the head table beside the staff director, Larry Block, and answering many of the questions about the complex legislation were three lawyers from Hunton & Williams, a Richmond, Va., law firm that has an extensive Washington practice representing dozens of electric utilities before environmental regulators and in court.

U.S. Stock, Bond Markets Sluggish After Rate Cut Although the dollar surged after the Bundesbank unexpectedly cut German interest rates, the move was shrugged off by stock and bond markets in the United States.

The Senate passed a bill yesterday to give the families of murder victims the right to try to persuade juries to give a convicted killer the death penalty. Among those lobbying for the bill were relatives of Gail Shollar, who was slain in a 1992 carjacking. Her family did not get to argue for her killer's execution; he was sentenced earlier this month to life imprisonment.

A Federal judge yesterday struck down the military's new policy on homosexuals, saying it violated the First and Fifth Amendments and catered to the fears and prejudices of heterosexual troops. In the first legal rebuff to the policy, enacted into law in 1993 and in effect for the last year, the judge, Eugene H. Nickerson of Federal District Court in Brooklyn, dismissed the Government's argument that morale and discipline would suffer if openly homosexual men and women were allowed to serve in the military.