WASHINGTON/NEW YORK (Reuters) - Massey Energy Co is under criminal investigation by the FBI after the deadly mine explosion in West Virginia, U.S. officials familiar with the matter said on Friday, news that sent the company’s stock plummeting.
The FBI is probing the company and the circumstances surrounding the explosion which killed 29 miners, including for potential negligence, the officials said, declining further identification.
The miners died at the Upper Big Branch mine in Montcoal, West Virginia, on April 5, in the worst U.S. mining disaster since 1970.
President Barack Obama attended a memorial service for the men on Sunday and stressed the need for greater mine safety. On April 15, he placed primary blame for the disaster on Massey.
FBI and Justice Department officials declined to comment. National Public Radio reported that the agency that regulates the industry, the Mine Safety and Health Administration, was also under investigation related to potential bribery, but one U.S. official denied that report.
“We are aware that investigators are interviewing witnesses, but are not aware of the nature of their investigation,” the company said in a statement. “We intend to cooperate in all phases of the accident investigation.”
Shares of Massey Energy dropped 11 percent, or $4.53, to $36.63 by the end of regular trading on the New York Stock Exchange. The stock is down 33 percent since the explosion.
Another mining accident happened this week in which two miners were killed in a Kentucky mine when a roof collapsed.
Massey earlier this week accused unions of spreading a “big lie” that the company had traded safety for profit, and Massey director Bobby Inman dismissed calls by shareholders to remove Chief Executive Officer Don Blankenship.
Inman said Blankenship had borne the brunt of criticism for the accident at the Upper Big Branch, where the 29 miners who died were non-union, and he said firing the CEO was “not in the cards.”
Last week, Blankenship denied the explosion was the result of “willful disregard” for safety regulations but acknowledged that eight Massey mines were targets for an inspection “blitz” by MSHA.
Earlier the company said it will take a second-quarter charge of $80 million to $150 million to cover family benefits and costs of the blast at the mine.
“The explosion was not caused by willful disregard for safety regulations, as the media would have you believe. We have one of the most comprehensive safety programs,” Blankenship told Wall Street analysts.
Organized labor has charged that Massey’s safety record is inferior to that of most other major coal companies. “The big truth is that 52 people have been killed on Massey property since 2000,” United Mine Workers of America spokesman Phil Smith told Reuters. “No other coal company has had even half that.”
One investor, CtW, has called on shareholders to vote for removal of three directors because the Upper Big Branch blast “destroyed $1.1 billion in shareholder value, was preventable and occurred at a mine with an alarming record of serious violations.”
Also, the law firm Robbins Geller Rudman & Dowd LLP said it has filed a class action suit on behalf of Massey shareholders charging Massey and company officers and directors with violations of the Securities Exchange Act.
Additional reporting by James Vicini in Washington; editing by Gerald E. McCormick, Lisa Von Ahn and Bernard Orr