Warning for All Executives: The Feds Are Watching

Whether you think well of former Massey Energy CEO Don Blankenship or dislike him; whether you are a "Friend of Coal" or a "War on Coal" supporter; Blankenship's conviction should get the attention of any Executive in any industry. The federal prosecutor on the case said it was the first time a chief executive of a major corporation was convicted of a workplace crime. "Unprecedented" was the word. Blankenship was tried on charges of conspiring to break safety laws, defrauding mine regulators and lying to financial regulators and investors about safety. After a 9 week trial, and 10 days of deliberations, the jury brought back a guilty verdict of conspiring to willfully violate mine safety standards. This one will be analyzed for years, despite any appeals, despite any sentences imposed and despite any hindsight pontifications of how the case should have been tried by both sets of attorneys. One fact is certain--an executive got convicted.

The federal prosecutor maintained that Blankenship owed fiduciary duties to the company for compliance with mine safety and health laws and claimed that Blankenship was a "micromanager who meddled in the smallest details at the mine." Purporting to sum up the thoughts of the other jurors, one juror pointed to testimony that Blankenship had told his subordinate manager to start up a mining process, after knowing it was illegal, telling the manager to not let the federal regulators run the mine. Despite a Hazard Elimination program, the jurors were informed that violations purportedly still went up. The jurors were presented with evidence of an emphasis on production and had concluded that Blankenship was responsible for safety failures.

In addition to his concerns over sentencing and restitution, Blankenship faces a rejection of an agreement with now bankrupt Alpha Natural Resources, Inc. (which bought Massey) to pay for his legal services incurred in the defense. Although the total final figure has not been disclosed, court documents as of April 1, 2015 show unpaid fees estimated at $5.8 million.

Two weeks after the verdict, the U.S. Department of Justice and the U.S. Department of Labor announced new plans to investigate and prosecute worker endangerment violations. Regardless of the ultimate outcome of the Blankenship case, a new day may have dawned for executive criminal liability.

So, what does all of this mean for any executive? While the legal mechanism has been in place for decades to go after top managers for workplace safety, the target just got repainted in bright red. What is your current involvement in the daily workplace safety of your company? What should be your involvement? A thorough inventory of how you conduct business is in order.



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