Mega-Financier Wilbur Ross Owns the Mine Where Disaster Occurred
Reported by Marie Therese - January 3, 2006
FOX News has been covering the mining disaster in West Virginia non-stop for the past two hours (using a soundtrack theme that sounds remarkably like the old OJ Simpson trial music from CNN). Ben Hatfield, CEO of International Coal Group (ICG), has been very visible on TV and just announced that the air quality tests are not hopeful, since they contain high levels of carbon monoxide . However, to date I've heard no one mention that mega-financier Wilbur L. Ross, Jr., a very high-profile entrepreneur, is the ultimate owner of the Sago mine. The FOX & Friends anchors have mentioned several times that there have been numerous complaints involving the mine and possibly 46 of them were deemed "serious" by the Mining Safety and Health Administration.
According to the company profile on Yahoo Finance, ICG "engages in the extraction processing, and marketing of steam and metallurgical coal from deep and surface mines, principally located in Kentucky, West Virginia, and Illinois. It sells coal to electric utilities and industrial customers primarily in the eastern United States. As of January 1, 2005 the company owned or controlled approximately 315 million tons of metallugical coal reserves and approximately 572 million tons of steam coal reserves. ICG owns 12 mining complexes located in West Virginia, Kentucky, and Maryland, as well as a complementary mining complex of mid to high sulfur steam coal located in the Illinois Basin. The company was formed in 2004 and is based in Ashland, Kentucky. ICG acquired Anker Coal Group, Inc. and CoalQuest Development LLC in November 2005."
According to a report in The Guardian:
ICG acquired the Sago Mine (pronounced SAY-goh) last March when it bought Anker West Virginia Mining Co., which had been in bankruptcy. The Sago Mine had annual production of about 800,000 tons of coal, the company said.Federal inspectors cited the mine for 46 alleged violations of federal mine health and safety rules during an 11-week review that ended Dec. 22, according to records.
The more serious alleged violations, resulting in proposed penalties of at least $250 each, involved steps for safeguarding against roof falls, and the mine's plan to control methane and breathable dust. The mine received 208 citations from MSHA [Mining Safety & Health Administration] during 2005, up from 68 citations in 2004.
The state Office of Miners' Health Safety and Training issued 144 notices of violation against the mine in 2005, up from 74 the year before.
Kitts said safety at the mine has improved dramatically since ICG took over and the company is working closely with regulatory agencies to make further improvements.
"We think that we are operating a safe mine,'' he said. "We have no real clue about what triggered this explosion or what happened today.''
Wilbur Ross has been interviewed frequently on CNBC and CNN and profiled by both Business Week and Forbes Magazine. He sits on the Board of Directors of News Communications Inc, which publishes The Hill, a weekly non-ideological newspaper that covers Washington politics. FOX News contributor Dick Morris writes for "The Hill," among others.
Wilbur Ross is best known as the "crazy" man who made a fortune taking over bankrupt companies.
Bankruptcy is the Greyhound bus terminal of corporate America—a dimly lit hall peopled by hard-luck losers, duped lenders, congenital screwups, and, occasionally, powerless victims of vast global forces. And most professional investors regard bankrupt industrial firms as toxic piles; they flee before the crud can soil their Allen-Edmonds wingtips. But Chapter 11 allows those with an eye for damaged goods to gain control of assets on the cheap. Why? Busted companies can reject leases, walk away from debt, terminate health-care promises, and punt pension plans onto the federally sponsored Pension Benefit Guaranty Corporation. Such debt purges can suddenly make crappy business models seem brilliant.- Excerpt from "The Bottom Feeder King," New Yorker Magazine, 11-8-04
Ross is attempting to implement the same model in the coal industry that he used to energize his so-called "rescue" of the American steel industry (with a helping hand from the Bush administration's enactment of a 30% tariff on foreign steel and major concessions from the workers). However, he made his $267 million on the backs of 150,000 workers.
According to the site Making Steel:
Now consider those who were left behind during Ross’s whirlwind romance with the steel industry. They total about 150,000 Americans, all of them old, quite a few of them sick, and all of them poorer than they had ever imagined they would be when they retired after collectively serving some 4.5 million years around the heat and soot of furnaces.About 95,000 retirees of defunct Bethlehem Steel, for example, collectively lost $380 million in health-care benefits between March 31, 2003, when those benefits were terminated by Judge Burton Lifland of U.S. Bankruptcy Court, and October 25, 2004, when Ross agreed to sell the former Bethlehem assets to Mittal.
Over the same time span, the federal Pension Benefit Guaranty Corp. paid out roughly $500 million to maintain a reduced level of pension benefits for ex-Bethlehem retirees. Roughly $200 million more in PBGC funds went out to 40,000 retirees at LTV and the 10,000 retirees at Weirton Steel, which also shed their “legacy costs” before they were bought out of Chapter 11 bankruptcy by Ross’s ISG.
In back-of-the-envelope terms, about 145,000 Americans and the PBGC had absorbed about $1.1 billion in losses arising from Wilbur Ross’s “rescue” of the bankrupt steel companies ...
In the same article they point out that Ross
... is a member of the Yale School of Management Board of Advisors (joining Rupert Murdoch’s Yale MBA wife, Wendy Deng Murdoch), the Business Round Table, and the Turnaround Management Association. He is a popular speaker, recently addressing students and faculty at Columbia University’s Graduate School of Business and slated to appear at the Fall 2005 Private Equity Analyst Conference sponsored by Dow Jones & Co., publisher of the Wall Street Journal.
COMMENT
It will be interesting to see if FOX News (and other media) explore the question of whether or not Wilbur Ross' cut-it-to-the-bone-and-milk-it-for-all-its-worth management style created a pressure to cut expenses and increase productivity that might have resulted in this horrific event.
