Massey stocks plummet on criminal probe newsPublished by MAC on 2010-05-07
Source: Reuters, Bloomberg (2010-05-03)
Following on the West Virginia mine disaster (see: http://www.minesandcommunities.org/article.php?a=10045), Massey Energy is to be criminally investigated by the FBI.
Massey have come out fighting, accusing the unions of spreading a "big lie" that the company had traded safety for profit.
Mr Blankenship, Massey’s chairman and chief executive - who denies the existence of global warming and describes environmentalists as “greeniacs” - has been under increasing pressure, but evidence of criminal conduct should end any hopes he has of hanging on to his job.
Massey stocks plummet on criminal probe news
US officials close to the matter say Massey Energy is under criminal investigation by the FBI after an explosion at its Upper Big Branch mine killed 29 miners
Jeremy Pelofsky and Steve James
3 May 2010
WASHINGTON/NEW YORK - Massey Energy Co is under criminal investigation by the FBI after the deadly mine explosion in West Virginia, U.S. officials familiar with the matter said on Friday, news that sent the company's stock plummeting.
The FBI is probing the company and the circumstances surrounding the explosion which killed 29 miners, including for potential negligence, the officials said, declining further identification.
The miners died at the Upper Big Branch mine in Montcoal, West Virginia, on April 5, in the worst U.S. mining disaster since 1970.
President Barack Obama attended a memorial service for the men on Sunday and stressed the need for greater mine safety. On April 15, he placed primary blame for the disaster on Massey.
FBI and Justice Department officials declined to comment. National Public Radio reported that the agency that regulates the industry, the Mine Safety and Health Administration, was also under investigation related to potential bribery, but one U.S. official denied that report.
"We are aware that investigators are interviewing witnesses, but are not aware of the nature of their investigation," the company said in a statement. "We intend to cooperate in all phases of the accident investigation."
Shares of Massey Energy dropped 11 percent, or $4.53, to $36.63 by the end of regular trading on the New York Stock Exchange. The stock is down 33 percent since the explosion.
Another mining accident happened this week in which two miners were killed in a Kentucky mine when a roof collapsed.
Massey earlier this week accused unions of spreading a "big lie" that the company had traded safety for profit, and Massey director Bobby Inman dismissed calls by shareholders to remove Chief Executive Officer Don Blankenship.
Inman said Blankenship had borne the brunt of criticism for the accident at the Upper Big Branch, where the 29 miners who died were non-union, and he said firing the CEO was "not in the cards."
Last week, Blankenship denied the explosion was the result of "willful disregard" for safety regulations but acknowledged that eight Massey mines were targets for an inspection "blitz" by MSHA.
Earlier the company said it will take a second-quarter charge of $80 million to $150 million to cover family benefits and costs of the blast at the mine.
"The explosion was not caused by willful disregard for safety regulations, as the media would have you believe. We have one of the most comprehensive safety programs," Blankenship told Wall Street analysts.
Organized labor has charged that Massey's safety record is inferior to that of most other major coal companies. "The big truth is that 52 people have been killed on Massey property since 2000," United Mine Workers of America spokesman Phil Smith told Reuters. "No other coal company has had even half that."
One investor, CtW, has called on shareholders to vote for removal of three directors because the Upper Big Branch blast "destroyed $1.1 billion in shareholder value, was preventable and occurred at a mine with an alarming record of serious violations."
Also, the law firm Robbins Geller Rudman & Dowd LLP said it has filed a class action suit on behalf of Massey shareholders charging Massey and company officers and directors with violations of the Securities Exchange Act.
(Additional reporting by James Vicini in Washington; editing by Gerald E. McCormick, Lisa Von Ahn and Bernard Orr)
FBI Probe of Massey Said to Focus on Possible Bribery
Chris Stratton and Margaret Cronin Fisk
3 May 2010
Massey Energy Co., dealing with the death of 29 miners at one of its West Virginia coal mines, is being investigated by the FBI for possible bribery of state and federal inspectors, a person familiar with the probe said.
An April 5 explosion at the Richmond, Virginia-based company's Upper Big Branch Mine resulted in the deaths and sparked the investigation by the bureau, a second person familiar with the matter said April 30, asking not to be identified because the matter is confidential.
At least two dozen Massey employees, federal and state officials and mine union members have been interviewed by agents of the Federal Bureau of Investigation, the first person familiar with the investigation said.
The mine and its operators could be held criminally responsible for the explosion if there were any "overt acts," such as falsification of inspection documents or evidence of tampering with monitors and recording devices, said Bruce Stanley, a Pittsburgh attorney who represents the widows of two miners killed in an earlier incident.
"It's too early to provide any comment at this point," Massey spokesman Roger Hendriksen said in a phone interview today.
Should the FBI interview turn up evidence of criminal conduct, the matter would be referred to the U.S. Attorney in the Southern District of West Virginia, the first person said.
The U.S. Department of Labor Mine Safety and Health Administration and the West Virginia Office of Miner's Health Safety and Training have also been investigating the accident.
A pending investigative report from the Office of Miners Health Safety and Training might be referred to both the U.S. Attorney's Office and the Office of the Prosecuting Attorney for Raleigh County, West Virginia. If U.S. and state investigations show only violations of state law, the matter would be referred to the county prosecutor, the first person said.
West Virginia Governor Joe Manchin will receive a report from an independent investigation headed by former MSHA Director J. Davitt MacAteer. MacAteer was previously named by Manchin to investigate a fire at Massey's Aracoma Alma No. 1 mine and an accident at International Coal Group's Sago Mine, both of which occurred in January 2006.
The Aracoma mine fire resulted in the company's being fined $2.5 million, placed on probation and assessed $1.7 million in civil penalties for MSHA citations accrued both before and after the fire.
Aware of Probe
Massey fell $4.53 or 11 percent to $36.63 on April 30 after the FBI investigation into possible bribery of federal officials and criminal negligence was reported by National Public Radio. Massey rose 89 cents to $37.52 at 3:59 p.m. today in New York Stock Exchange composite trading.
"We are aware that investigators are interviewing witnesses, but are not aware of the nature of their investigation," Massey said the same day in a statement. The company said it intends to cooperate in all phases of the accident investigation.
"We never comment on criminal investigations," MSHA spokeswoman Amy Louviere said.
Fined Over Fire
Calls to the West Virginia Office of Miners Health Safety and Training were not immediately returned.
Tracy Schmaler of the U.S. Department of Justice press office did not immediately return a call for comment.
Stanley sued the federal mine safety agency April 28 on behalf of Delorice Bragg and Freda Hatfield, whose husbands were killed in the 2006 fire at Massey's Aracoma Mine. Don Bragg, 33, and Ellery "Elvis" Hatfield, 46, were suffocated by smoke after a fire broke out at the mine in Melville, West Virginia. MSHA fined Massey $1.5 million in 2007 over the fire, citing 25 violations that contributed to the deaths. U.S. officials said Aracoma's employees removed ventilation controls, called stoppings, while installing electrical equipment. This allowed smoke into the escape route.
Aracoma agreed to plead guilty in December 2008 to nine counts of willful violation of mandatory safety standards and one count of making a false statement and pay a criminal fine of $2.5 million, according to court records. Acceptance of the plea was delayed until April 2009 after the miners' widows asked that it be rejected because the U.S. had agreed not to prosecute anyone at the parent company for offenses connected to the accident.
The Upper Big Branch Mine, located in Montcoal, is operated by Performance Coal, a Massey unit. The miners' widows sued the U.S. in federal court in Charleston, West Virginia, alleging the federal mine safety agency breached a duty to protect the workers.
Safety agency inspectors failed to "inspect and remedy egregious safety violations that existed in the Alma mine," Bragg and Hatfield said in their lawsuit. In the year before the fire, inspectors issued 95 citations at the Alma mine and didn't require mine operators to take corrective action, the women claim, citing MSHA's investigation.
The widows' case is Bragg v. U.S., 2:10-cv-00683, U.S. District Court, Southern District of West Virginia.
With the assistance of Mario Parker in Chicago and Justin Blum in Washington. Editors: Patrick Oster, David E. Rovella.