Posted tagged ‘FBI Probe’

Is Massey’s Blankenship Bracing Against Reputation Cave-In?

May 31, 2010

Update May 30, 2011: Blankenship retired in December 2010 and in May 2011, the first investigative report was issued. This one is by the former West VA Governor’s Independent Investigative Panel, see May 2011 column.

The verdict is literally still out on Massey Energy’s safety record at its deadly Upper Big Branch mine in West Virginia and the effectiveness of Chairman and CEO Don Blankenship’s safety leadership. Federal and state investigations are ongoing. This week investigators are finally expected to be able to re-enter the mine, which was closed April 5, 2010 after an explosion led to the deaths of 29 miners. A criminal probe by the FBI also underway is said to be looking at whether Massey employees bribed Mine Safety Health Administration (MSHA) employees.

When Blankenship testified before a U.S. Senate Subcommittee recently about the explosion, he defended his commitment to safety and pointed the finger of blame back at the federal government as a potential cause of the worst mine disaster in 40 years. Blankenship said that if the mine’s ventilation system is found to be at fault in the investigations, he wanted it clear that recommendations required by the MSHA could have caused the problem.

MSHA has pushed back, but Blankenship, also a director of the U.S. Chamber of Commerce, doesn’t shrink from controversy. Part of Massey’s leadership team for 20 years, the last 10 in his current position, he has survived critics and calls for his resignation, and soldiered on with his offensive.

I talked about criticisms of Blankenship’s leadership in safety in a previous column,

Meanwhile, in recent weeks, in the course of continuing spot inspections, Upper Big Branch mine has been cited for 23 more safety violations (in addition to the 500 last year), three of which are considered “substantial and significant.

However, Massey received a PR gift, posted in its own press release on its website May 28, 2010. Nine of its mines were honored by a Joseph A. Holmes Safety Award this month for their safety records.  Upper Big Branch was not included in the mines recognized.

Interesting thing about the award is that two officers of the Holmes association work at MSHA. CBS reported that they tried the number listed for the association and it rang into a MSHA office in Virginia.

The outcomes of the investigations and the determination of whether Massey did all it should have reasonably been expected to do to protect its miners and operate a safe mine will impact the reputations of its board as well as Blankenship. At a press conference soon after the explosion, Blankenship and some other board members stood behind the company’s safety record.

Massey’s board responded to the calls for Blankenship’s resignation by giving him a vote of confidence , and saying it wasn’t in the company’s best interest to make a change.

Shareholder pressure in the past year called for Lady Barbara Thomas Judge, chair of the governance committee and on the safety committee, to resign from Massey’s board of directors because she reportedly sat on a few dozen other boards – and the time she could reasonably devote to Massey was challenged. Judge stepped down from the board at the end of April.

At the Annual Meeting, three Massey directors up for re-election received the highest opposition votes at any S&P 500 company this year, but were re-elected.

Massey’s stock fell $1.4 billion  in the four weeks after the explosion. Blankenship, who had quite a twitter presence up to a few days after the explosion, now, tweets no more. The miners have been buried, their families continue to mourn. Lawsuits have been filed. Investigations are ongoing. More safety violations pile up. And if the verdict is that safety was not Massey’s sufficient priority, will this prove to be the proverbial canary in the coal mine that can lead to real change?

Gael O’Brien, May 30, 2010

The Week in Ethics


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