On Monday, after reading the headlines and then penning my own stories about some more acquisition rumors regarding Massey Energy, I could not help but think the following thought: This is an obvious example of a company's assets being so specious that some skeletons in the closet get overlooked. I kind of felt the same way when the acquisition rumors surrounding BP really heated up in the days following the Gulf of Mexico oil spill, but since no deal came to pass on that front, it might be fair to assume that no one was willing to overlook BP's spotty safety record and untold future liabilities.
Not to be trite, but it can be argued that Massey (MEE) is the BP of the coal world. A company whose safety record is so tarnished that while the fatal blast at the Upper Big Branch mine in April where 29 workers perished was tragic, it was not all that surprising. According to the Washington Post, that mine was cited for over 1,300 safety violations from 2005 until the time it was shuttered following the April blast.
In a true testament to the incompetence of the U.S. government, Massey received some other citations. Actually, these citations should be called laurels because that is what they are. The Mine Safety and Health Administration gave Massey not one, not two, but three Sentinel of Safety awards just six months before the worst accident at a U.S. coal mine in four decades.
The hits do not stop with Massey, the largest coal producer in the Central Appalachia region. The now notorious Minerals Management Service (MMS) bestowed a Safety Award for Excellence (SAFE) award on Transocean in 2009. To be fair, I will assume no one at MMS had a crystal ball prior to giving that award to Transocean (RIG).
Still, it is this kind of news that shakes citizens' faith in their government. It is perfectly logical to wonder why a company that had received 1,300 safety citations was also wining safety awards. This is exactly the kind of stuff that makes ordinary folks think they cannot trust their government. If there are no standards for safety awards then safety standards themselves should be questioned, right?
Guess what other company was nominated for a SAFE award earlier this year. Believe it or not, BP (BP) was. The government was able to solve that situation by withdrawing the nomination after the Gulf spill, taking care of the embarrassment before it was widely reported, but nominating BP for a safety award in the first place is just plain dumb. After all, the nomination was made in 2010 and that was after the fatal blast at BP's Texas City refinery in 2005, the 2006 Alaska pipeline leaks and probably some other safety issues that never grabbed a lot of press.
Apparently, there are no standards for government safety awards and that is deeply troubling regardless of your feelings about coal mining and offshore drilling.