Ross found prof­its and con­tro­versy in Rust Belt

The Denver Post - - NEWS - By Jeff Hor­witz

wash­ing­ton» Wil­bur Ross, Don­ald Trump’s choice for Com­merce sec­re­tary, has a his­tory of sal­vaging fail­ing ven­tures — in­clud­ing, at one point, Trump’s own.

Now worth an es­ti­mated $2.9 bil­lion, Ross grew up in an af­flu­ent New Jersey sub­urb be­fore head­ing to Yale Uni­ver­sity, Har­vard Business School and Wall Street. A spe­cial­ist in bank­rupt­cies, Ross headed the re­struc­tur­ing prac­tice at in­vest­ment bank­ing firm Roth­schild Inc. when Trump’s bad bets in the At­lantic City casino in­dus­try had put him on the verge of los­ing ev­ery­thing. Ross con­vinced cred­i­tors to drop a plan to strip Trump’s name and own­er­ship from the Taj Casino, a vic­tory that set the stage for Trump’s even­tual res­ur­rec­tion.

“The Trump name added value,” Ross told Busi­ness­week in 1992.

In 2000, Ross de­parted Roth­schild to launch his own pri­vate eq­uity firm. The work brought Ross to the heart of struggling in­dus­tries in­clud­ing tex­tiles, sub­prime mort­gage ser­vic­ing, steel and coal: the more trou­bled, the bet­ter. But his time in the coal in­dus­try in­cluded a dis­as­ter that cost 12 lives at the Sago Mine in West Vir­ginia, and the mort­gage ser­vic­ing business drew com­plaints about business prac­tices that ended in a na­tional le­gal set­tle­ment.

The essence of the work was to buy fail­ing com­pa­nies, re­pair them to make them pre­sentable to in­vestors and exit the in­vest­ment through a sale or pub­lic of­fer­ing; Ross’ ven­ture into coal min­ing fol­lowed the same pat­tern and achieved sim­i­lar fi­nan­cial suc­cess. Start­ing in 2001, Ross be­gan buy­ing coal com­pa­nies and merg­ing them into the In­ter­na­tional Coal Group. The com­pany de­clared it­self to have an ex­cel­lent safety record be­fore it raised $250 mil­lion in a 2005 pub­lic of­fer­ing.

Just weeks later, a meth­ane ex­plo­sion killed one miner at the com­pany’s Sago Mine in West Vir­ginia and trapped a dozen oth­ers — 11 of whom later died of car­bon monox­ide poi­son­ing be­fore res­cuers could reach them. In the af­ter­math of the dis­as­ter, at­ten­tion turned to the mine’s past safety vi­o­la­tions — in­clud­ing ven­ti­la­tion fail­ures, the ex­ces­sive buildup of flammable gases and par­tial col­lapses of the mine’s roof.

Ross ac­knowl­edged that he was aware of the mine’s his­tory of safety vi­o­la­tions but said he be­lieved its op­er­a­tion was safe.

“Oh, my God, it’s the worst week of my en­tire life,” Wil­bur Ross said at the time.

The pub­licly traded In­ter­na­tional Coal Group gave $2 mil­lion to the min­ers’ families — and Ross per­son­ally matched do­na­tions to a fund, ac­cord­ing to Don Nestor, an at­tor­ney who over­saw it.

The fund raised $1.36 mil­lion, ac­cord­ing to New York state tax fil­ings, sug­gest­ing that Ross’s con­tri­bu­tion was less than $700,000.

Ross did not re­spond to a re­quest for an interview made to his firm, WL Ross & Co. The firm sold In­ter­na­tional Coal Group in 2011, for $3.4 bil­lion.

After the dis­as­ter, the AFL-CIO ac­cused In­ter­na­tional Coal Group of hid­ing the safety risks of its min­ing operations be­fore the ini­tial pub­lic stock of­fer­ing.

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