A former Massey Energy Co official at a West Virginia coal mine, where a 2010 explosion killed 29 workers, pleaded guilty to impeding federal regulators.
Separately, a federal judge declined to dismiss a securities fraud lawsuit against Massey. The class action suit alleges that former Massey officials, including former CEO Mr Don Blankenship, lied about the company's safety practices to artificially inflate its stock price between 2008 and 2010 and seeks damages in the hundreds of millions of dollars.
Both cases center on allegations that former company officials engaged in criminal activity to maximize profits by concealing safety problems that ultimately led to the deaths of workers. The explosion at Massey's Upper Big Branch mine in Montcoal was the worst US coal mining disaster in four decades.
Former Massey superintendent Mr Gary May pleaded guilty to one count of conspiracy to defraud the US by obstructing the Labor Department's Mine Safety and Health Administration, which inspects mines and fines operators for safety violations. Mr May oversaw underground operations in the part of the mine where the explosion occurred.
Mr May specifically pleaded guilty to tipping off miners underground about inspections, falsifying record books, illegally rewiring a mining machine to operate without a functioning methane monitor and altering the mine's ventilation to trick a federal inspector.
Mr May is the highest ranking former Massey official to face criminal charges. He faces a maximum penalty of five years in prison.
Mr Booth Goodwin, the US Attorney in Charleston, wrote in the plea agreement that laws were routinely violated by Massey because of a belief that following those laws would decrease coal production.
Mr Goodwin called Mr May's guilty plea a key conviction and said that "We hope he can give us a better picture of what was going on at this company."
In 2011, Alpha Natural Resources Inc of Abingdon acquired Massey for USD 7.1 billion. Mr Ted Pile, an Alpha spokesman, said Mr May was terminated Thursday following his guilty plea. He said the company was cooperating with the criminal investigation.
Both the criminal investigation and the investor lawsuit are being heard by US District Court Judge Mr Irene Berger in Beckley.
Judge Mr Berger refused to grant a motion to dismiss the lawsuit. The plaintiffs, led by the Massachusetts Pension Reserves Investment Trust, allege that Massey and former officers and directors misled investors between February 1st 2008 and July 27th 2010, by claiming to be one of the industry's safest companies, while concealing the company's practices and extent of regulatory violations.
The lawsuit alleges that Massey's stock price increased numerous times in 2008 and 2009 following positive statements by the company about its safety performance, but that the stock fell after the accident as safety problems were made public.
Source - WSJ.com
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