When I was in business school – lo, these many years ago – I took a course entitled “Business Ethics.” The course was pretty interesting and, given that this was MIT, a nice break from the generally quantitative norm of the Sloan curriculum at that time. (Think I’m kidding: our first year economics professor was nicknamed dy/dBob.)
As we worked our way through the cases – yes, the content came from the Harvard Business School lode – it struck me that the stories, while wildly different in some respects, were like medieval morality plays in another in that they all had the same upshot: in the long run, it always would have been better for the company to do the right thing to begin with.
Or so I thought at the time, when I figured that, if you couldn’t do the right thing for the right reason, you could do it because you were afraid you’d be found out have to deal with all the pain and shame of getting caught.
But over the years, I realized a couple of important things.
One, we only know about the cases where someone actually gets caught. There have to be at least a few circumstances in which the evil-doers actually got away with something.
Two, most of those engaging in malfeasance of some sort don’t ponder the likelihood of getting caught for all that long. If at all. Many, I would hazard, are so full of self and hubris that getting caught never occurs to them. And I suspect that many are so full of self and hubris that they define “the right thing” as whatever they’re doing. (Kind of a business version of l'état, c'est moi.)
This is obviously not the case with Massey Energy, which, it was recently disclosed, had added its long and ignoble “reputation for putting coal profits first” by keeping two sets of books. One for the government regulators concerned about safety in coal mines, the other for itself.
Massey, as you may recall, owned the West Virginia mine, Upper Big Branch, where 29 men were killed last April.
According to Mine Safety and Health Administration findings, senior management pressured company inspectors to take part in the Massey version of double entry bookkeeping, keeping information on “chronic hazardous conditions” off the official books.
I remember when this mining disaster occurred that there were many folks interviewed who refused to work for Massey because of its abominable safety record.
But the choice of working for Massey or not was no simple one if you lived in a hardscrabble coalfield town where the options are limited for those who for reasons of family and tradition want to stay there, rather than move out and on.
It’s not as if Massey had been free and clear before this latest revelation.
There’s a Justice Department criminal investigation. And, I’m sure, plenty of civil action on the part of the victims’ families. Not to mention that, in May, an independent commission established by West Virginia’s governor released a report on the Upper Big Branch disaster.
The 120-page report offered a scathing indictment of Massey practices at the Upper Big Branch mine, pieced together through months of interviews and the analysis of documents, data and correspondence.
The report goes on to say that a “perfect storm” was brewing inside the mine, of poor ventilation, equipment whose safety mechanisms were not functioning and combustible coal dust “behaving like a line of gunpowder carrying the blast forward in multiple directions.”
Investigators flatly rejected the conclusion offered by Massey officials: that the explosion occurred because a giant burst of methane bubbled from the ground, an event that would have been impossible to predict or control. (Source: NY Times.)
The report also says that the workers were well aware of the abysmal working conditions, and quoted one of the dead miners that he was “just scared to death to go to work.”
And yet go to work these miners did, because the alternatives to not going into the pits were even bleaker.
One hopes that, for the families left behind, the future is a little less bleak, at least in terms of the monetary awards they can and should expect from Massey, or from Alpha Natural Resources, which recently acquired the company.
Alpha has a somewhat better safety record and rep than did Massey, but that’s pretty faint praise.
I know it’s not possible to take all of the occupational hazard out of every occupation, and surely coal mining is one in which there will always be substantial risk. But to stack the risk deck against the workers by deliberately hiding data on known problems….
Alpha is not off to that promising a start, if it wants to distance itself from Massey’s bad behavior. It hired Massey’s COO, Christopher Adkins:
…whose role in the disaster was strongly criticized in the report….Ted Pile, a spokesman for Alpha, said Mr. Adkins “will not have any role in making operational decisions at the mine level,” and his job would be in “business development,” far from the safety chain of command.
Still, the hiring of Adkins doesn’t seem particularly auspicious in any positive sense. (And I can’t help but note what a great name “Pile” is for the flack for a coal mining company.)
Pile was back in the news commenting on the dual-books allegation:
"We don't have enough information at this point to ascertain if the claim of separate books is valid or not," Pile wrote in an email, "but obviously we'll look at this as well as all the information that's available to us as we conduct our own review." (Source: Boston.com)
We haven’t heard the last of this, of course. I suspect that there’ll be some Massey executive prison time, some massive fines, and major payouts to the families of those killed.
I wonder when a Mr. Big or two is doing time, or when the eight-figure checks get written, whether Massey’s senior managers will come to that medieval morality play realization that they would have been better off in the long run if they’d done the right thing.
Or whether they’ll just be cursing the gods that they got caught.
(Hope for the former; expect the latter.)
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