Massey Energy: That's the Way the Kingdom Crumbles
This is like a John Grisham thriller put onto a reality show for all of us to see.
Months ago, it was announced that Alpha Natural Resources began the process of acquiring coal criminal Massey Energy
. Massey, long known for destroying Appalachia's mountains with mountaintop removal (MTR) coal mining and responsible for killing 29 of its own workers in the Upper Big Branch mining disaster
last year, was in serious financial trouble and Alpha swooped in to buy up the faltering coal giant's operations and assets.
[caption id="attachment_13511" align="alignleft" width="540" caption="Entrance to Massey Energy's Upper Big Branch coal mine on anniversary of 2010 mine disaster."]
But now, as the stellar reporting of Ken Ward Jr. tells us: "Shareholders argue that the merger is a bad deal for Massey shareholders, and that corporate insiders would profit from it and perhaps insulate themselves from liability over poor management of Massey and the deaths of 29 miners in the April 5, 2010, explosion at Upper Big Branch."
Shareholders in West Virginia and Delaware have filed two separate civil suits. Through the discovery process of these suits, we're seeing the really juicy insider thinking of Massey's coal barons as their kingdom crumbled. It's very much a "scorched earth" thinking, literally. Massey pushed the limits and produced as much coal as possible for maximum profit, mostly benefiting the executives at the expense of their own workers, Appalachia's mountains and the climate — until they caused such a catastrophe that they couldn't get away with it anymore. Then they shifted to selling off the remains for maximum profits in sweetheart deals and escaping any legal liability from the mining disaster.
Because Massey and Alpha execs have such a vested interest in profit, the lawsuit filed by Massey shareholders attempting to stop the Massey-Alpha merger
is headed to the West Virginia Supreme Court
According to documents being released through two civil suits, we're learning a lot about the Massey internal corporate culture. Most of it is stuff that we'd already assumed, but still interesting.
- The entire Massey organization appears to be managed by an autocratic central command and control structure. This can be seen in all facets of the organization and results in senior operating management being involved in lower level mine issues and decisions.
- The Massey culture is driven by a strong focus on production and its associated components with other facets of the operations, such as employee safety and regulatory compliance, receiving minimal consideration.
- The underground site visits indicated a strong cultural emphasis on production first with compliance and outby maintenance on a non-priority basis.
- The plants are generally poorly maintained and have been for a period of time.
- Alpha was ready to give now-retired Massey CEO Don Blankenship a job as a consultant after the companies were combined.
- The Upper Big Branch disaster cost Massey more than $166 million in out-of-pocket costs and $320 million in lost coal revenues.
- Massey execs were convinced that the Obama administration is out to destroy them.
Last week's report
on the Upper Big Branch disaster by independent investigator David McAteer gave further damning proof that Massey operated a profits-over-people corporate culture.
It's no wonder that Massey's board and insiders wanted to dump the company as quickly as possible.
And we’re wondering what Alpha’s financial backers are making of all this. Back in January, Morgan Stanley and Citi together committed $3.3 billion in financing for this deal, while UBS was Massey’s lead bank. All three of these banks have publicly stated their concern about MTR companies like Massey, yet here they are up to their necks in it.