Coal Miners’ Slaughter


Washington, D.C.—With funerals beginning for the 12 miners killed on the job last week in West Virginia—a 13th worker survived the underground explosion but sustained serious injury—attention now turns to the facility’s management. Wilbur Ross, 66, the owner of the Sago Mine, is a junkyard entrepreneur of Rust Belt manufacturing properties. Ross bought the Sago dig after 26 years of experience with Rothschild Incorporated, an international investment bank and an arm of the Rothschild family holdings. At Rothschild, he worked on advising bankrupt companies.

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 positioned—as 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 McCain—perhaps a presidential hopeful—won 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.

In the signing statement tacked onto the McCain amendment, the White House indicated the executive branch would construe McCain’s amendment “in a manner consistent with the constitutional authority of the President to supervise the unitary executive branch and as Commander in Chief . . . which will assist in achieving the shared objective of the Congress and the President . . . of protecting the American people from further terrorist attacks.” This proviso, inserted without discussion after Congress passed the bill, could amount to a reinterpretation of the new law. It essentially inserts yet another loophole to allow torture if the president thinks it’s necessary.

McCain and Senator John Warner, the outgoing chairman of the Armed Services Committee, issued a joint statement in re
sponse on Wednesday. “We believe the President understands Congress’s intent in passing by very large majorities legislation governing the treatment of detainees,” the lawmakers said. “The Congress declined when asked by administration officials to include a presidential waiver of the restrictions included in our legislation.”

Pennsylvania Democratic congressman John P. Murtha, who championed McCain’s anti-torture bill in the House of Representatives, doesn’t think the Bush add-on matters. In a statement issued by his office to The Village Voice, Murtha said, “I believe the president will follow the law and congressional intent regarding the provisions governing detainee treatment. . . . Further, the president has indicated as much in the press statement accompanying his signing statement on the [Department of Defense] appropriations act.”

But other observers lacked Murtha’s confidence. “By invoking the commander-in-chief authority, the president’s statement has disturbing echoes of the Bybee memorandum,” Avidan Cover, a senior associate in the U.S. Law and Security Program at Human Rights First explained. The Bybee memorandum, an August 2002 opinion from the Justice Department’s Office of Legal Counsel, argued the president could waive legal restrictions against the use of torture and inhumane treatment on detainees when national security is at risk.

Additional reporting: Michael Roston