Amer­ica's dirt­i­est coal com­pany

The Pak Banker - - OPINION - Bill Mckibben

IF you go to the web­site of the U.S. Bank­ruptcy Court of the East­ern District of Mis­souri, you can read more than 1,000 let­ters from re­tired coal min­ers and their wid­ows. Their words are like the lyrics to an end­less Johnny Cash bal­lad, and even more heart­break­ing. They tell the eter­nal tale of the greedy few, this time play­ing out in real time in our Amer­ica.

Here's the story: In the fall of 2007, Pe­abody En­ergy Corp. (BTU), the coalmin­ing gi­ant, spun off all its union­ized mines into a new com­pany, Pa­triot Coal Corp. (PCXCQ) In the process, it got rid of the prom­ises it had made over gen­er­a­tions to coal min­ers and their fam­i­lies.

Or, as Pe­abody's chief ex­ec­u­tive of­fi­cer put it, "We're re­duc­ing our legacy li­a­bil­i­ties roughly $1 bil­lion." This was such a good idea that an­other coal gi­ant, Arch Coal Inc. (ACI), un­loaded its union mines on Pa­triot as well, though it cy­cled them first through yet an­other front. All tot­ted up, Pa­triot now had 10,000 re­tirees and their health-care ben­e­fits on its books. This com­pany was de­signed to fail. Pa­triot is al­most cer­tainly the only five-year-old com­pany on earth with three times as many re­tirees as em­ploy­ees, 90 per­cent of whom never worked for the com­pany. And fail it did, declar­ing bank­ruptcy last sum­mer. Now it's go­ing through Chap­ter 11 re­or­ga­ni­za­tion and hop­ing to emerge freed of its obli­ga­tions for the pen­sions and med­i­cal care of those min­ers. In a cor­po­rate sleight-of­hand, the prom­ises won with a life­time of hard work and hard bar­gain­ing dis­ap­peared first into a hold­ing com­pany. Now, if the bank­ruptcy judge agrees, they will dis­ap­pear into thin air. Or, to put it more ex­plic­itly, here's a hand­writ­ten note from Shirley Wells of Sul­li­van, Ken­tucky: "Over the years thou­sands were killed in ex­plo­sions, fires, roof falls, and many other ac­ci­dents. ... Many oth­ers suf­fer from the slower death called black lung disease ... con­fined to their homes, de­pen­dent on oxy­gen." If Pa­triot has its way, they won't have the med­i­cal cards that pay for their treat­ment. And as one miner af­ter an­other points out in the let­ters, they bar­gained hard for those cards, pre­fer­ring guar­an­teed med­i­cal care over higher wages pre­cisely be­cause of the toll the work took on their bod­ies. In this coun­try, coal min­ing is our metaphor for hard work. There's really noth­ing much tougher on a per­son. Pa­triot's de­ceit is in­de­fen­si­ble even if you're a lais­sez- faire purist: It makes non­sense of ac­count­ing to so­cial­ize the risks of coal min­ing by toss­ing min­ers on the mercy of Medi­care. It's also com­pletely un­fair to any of Pa­triot's com­peti­tors will­ing to honor their obli­ga­tions. As a Tem­ple Univer­sity fi­nance pro­fes­sor, Bruce Rader, put it in a sting­ing re­buke to Pa­triot: "Cor­po­rate so­cial­ism is a sys­tem that pri­va­tizes prof­its and so­cial­izes costs. If that is con­sid­ered cap­i­tal­ism, then Al Capone is right in his state­ment: 'Cap­i­tal­ism is the le­git­i­mate racket of the rul­ing class.'" And in this case, Pa­triot is do­ing noth­ing to hide its fat- cat heart. Its bank­ruptcy ad­vis­ers billed $2,635 for a sin­gle din­ner; the com­pany is even now seek­ing court per­mis­sion to hand out $6 mil­lion in bonuses to ex­ec­u­tives.

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