By Jared Chausow
By Katie Toth
By Elizabeth Flock
By Albert Samaha
By Anna Merlan
By Jon Campbell
By Jon Campbell
By Albert Samaha
In 2000, Ross leveraged this expertise into a new business for himself, opening WL Ross & Co., with offices in New York, Tokyo, and Seoul. This outfit cobbles together bankrupt or failing companies in the coal, steel, and textiles industries, at a pace that has made Ross the nation's leading steel producer and a major player in the coal industry.
Often pictured as a corporate demon, Ross is something of an oddity because he supports national health care (Why should business pay for everything? he argues). He takes a popular union position against free trade and is particularly combative when it comes to trading with China.
Ross claims that when he buys a company and begins to cut costs, he fires managers and workers alike. He says he believes the U.S. must save its basic manufacturing industries, whose properties of course he is snatching up at bargain-basement prices. And naturally, he is politically and socially well positionedas a fundraiser for Bill Clinton, friend of John Kerry, and former husband of Betsy McCaughey, the onetime New York lieutenant governor who quit to run against George Pataki.
In describing the Ross takeover technique in the textile industry, Forbes had this to say: "Ross typically buys up 25 percent to 50 percent of a target company's debt, at a steep discount, as it's skidding toward bankruptcy, using capital from eight funds the WL Ross Co. manages. Once it's in Chapter 11, Ross gets himself elected head of the creditors committee and begins muscling management and unsecured lenders. Post-bankruptcy, Ross invests new equity capital from his own pocket. "
Working in the Appalachian coal belt, Ross assembled various mining properties, including those of the Anker Coal Group's Sago Mine. Sago had a record of various safety violations. Ross joined the Anker board of directors in 2001, so he can't very well say the violations occurred before his involvement. As a director and potential buyer of the firm, he should have known them in some detail.
It was in 2001, when Ross was joining the Anker board, that the coal company laid plans with Enron to market coal. By that time, Enron had spread its tentacles into all aspects of the energy business. Rothschild, Incorporated, Ross's old boss, was among the financial institutions linked to Enron and had been an underwriter of certain securities offerings. The marketing deal between Anker and Enron fell through when Enron unraveled. Ross moved ahead with a purchase of the Sago Mine, completing the buy in November 2005.
For a mine like Sago to have safety problems is not unusual. Coal companies can dodge federal and state regulations in part because enforcement is lax, and in part because of complicated corporate structures that pile one company on top of another, distancing the ultimate owner from actual operations.
In the case of Sago, Ross still has not filed for a transfer permit with the West Virginia Department of Environmental Protection, according to The Charleston Gazette. Before granting a transfer permit, the state is supposed to have checked out extant vioations and other legal requirements an exercise that might have helped prevent last week's deadly accident.
Businesses are required to file for a permit within 30 days of a transaction, which might appear to put Ross in violation of the law. But there is a technical hitch. Under another part of the regulations, the Gazette points out, the deadline for filing is extended to 120 days if the transaction does not involve the "immediate owners and controllers of the permittee or operator." There are four tiers of companies between the Sago Mine and the International Coal Group, possibly allowing the latter to claim it is within the law. So Ross may be able to squirm out of what would appear to be a serious violation of the law, albeit a law that the state of West Virginia did not enforce.
Sign here for torture, Mr. Bush
Most readers probably think gutsy senator John McCainperhaps a presidential hopefulwon a tough fight against George Bush last month over torture. McCain successfully retained blunt language outlawing torture by U.S. personnel in a bill just passed and signed by President Bush.
It quickly became apparent, however, that this legislation could turn out to be toothless. The new law contains exceptions for the CIA's foreign surrogate jailers who the agency can claim are beyond its direct control. What can it do to stop some sadistic prison contractor in Eastern Europe?
Last week, a tiff erupted over a curveball slipped in by the White House at the last minute. The Bush administration tacked on something called a "presidential signing statement," a final comment the White House puts on certain bills before the president actually signs them.