Prosecutors play back ex-coal CEO's phone calls at trial

AP News
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Posted: Oct 09, 2015 7:00 PM

CHARLESTON, W.Va. (AP) — Former Massey Energy CEO Don Blankenship lamented a push by his board to cap his salary at $12 million, called the group "so unappreciative," and said at least a quarter of his wealth was tied up in his company's stock, according to phone calls he secretly recorded in his office.

On Friday in Charleston federal court, prosecutors played back four calls and a memo from 2009 — the first round of several they'll present to a jury in Blankenship's criminal trial.

Blankenship faces charges of conspiring to break mine safety laws and lying to financial regulators about safety practices at Upper Big Branch Mine, in southern West Virginia. A 2010 explosion killed 29 miners there in the worst mine disaster in four decades.

Prosecutors have hand-picked recordings to make a case that the wealthy coal baron prioritized profits over safety at his mines, had huge windfalls when Massey did well, and lost millions after the mine explosion. They are also looking to paint Blankenship as a micromanager who was closely involved with Upper Big Branch's day-to-day operations.

Talking to a girlfriend in one phone call, Blankenship told her he saved the company $70 million and bragged the stock value was over $3 billion. He said the board was "so unappreciative."

"They talk about all my pay being in stock and all of it being on options and none of it being in cash," Blankenship said in the call. "Finally I said I can't go to the grocery store and buy groceries with options."

Blankenship secretly had recording devices installed in his office at Massey.

On Friday, an FBI agent testified that Alpha Natural Resources produced the recordings through a subpoena. The company used them in a Delaware Chancery Court case in which the now-bankrupt coal producer, which bought Massey, was ordered to pay Blankenship's criminal defense legal fees.

One of the recordings that garnered the most attention in Alpha's case is set to be played in Blankenship's trial.

"Sometimes I think if it weren't for (the U.S. Mine Safety and Health Administration), we'd blow ourselves up," Blankenship says in the recording.

He said in one call that a quarter or more of his wealth was in Massey stocks, adding that he doesn't have as much money as he should.

"As I said earlier, I'm very conservative on diversity and that's one reason I don't have as much money as I should have because I'm always too conservative," Blankenship said in the recording.

In a dictated memo played for the jury, Blankenship said capital spending without approval would be grounds for termination.

On Friday, Blankenship's former executive assistant at Massey, Sandra Davis, testified that it was Blankenship's voice on the recordings. Davis said Blankenship would dictate his memos and she would transcribe them. Prosecutors are also leaning on plenty of memos to contend that Blankenship knew his mines needed safety improvements, but wouldn't spend the money to address them.

In another call, Blankenship says Massey has "got a lot of money," about $800 million in the bank.

Blankenship's attorneys said 21 phone recordings shouldn't be played for the jury. Judge Irene Berger tossed three recorded conversations that had to do with stocks.

Blankenship's attorneys contend that the former CEO focused on safety and did not think breaking regulations was a smarter business plan than fixing health hazards, despite his reputation as a tough boss and divisive public figure.