Coal Dust Scam II

Thirty-three coal companies and 43 individuals reached plea bargain agreements with the Mine Safety and Health Administration (MSHA) in October, following charges that they conspired to "impair or impede" the agency's coal dust sampling program. The last-minute agreements settled allegations that a coal mining consulting firm, Triangle Research Inc., assisted coal companies in West Virginia, Virginia and Kentucky in submitting false dust samples to the agency.

The MSHA dust-sampling program, designed to safeguard the health of miners, requires coal-company operators to periodically test the amount of ambient dust at mining sites. Long-term over- exposure to the dust can cause black lung disease. "It's a shame that the people involved in this network of fraud didn't give equal forethought to the danger for the miners," says Labor Secretary Lynn Martin.

According to the charges brought by MSHA, the coal companies signed blank documentation declaring that their coal-dust samples were properly obtained. The employees of Triangle then created false samples away from the mines and provided the false information to MSHA. The scheme prevented MSHA from detecting potentially unhealthy atmospheres in the mines, thereby enabling the mine operators to avoid sanctions that might have followed, including orders to shutdown mines until they meet federal dust standards.

GE's Killer Coffee Maker

General Electric knew that a safety feature on its automatic coffee maker would fail and cause fires, but it chose not to correct the problem and vigorously denied responsibility for hundreds of the fires, victims of the defective coffee maker and their attorneys said last month. According to the allegations, which were first disclosed on ABC News' "Primetime," despite the fact that a 1981 internal GE memorandum acknowledges that people were likely to be injured by the defective coffee maker, the company continued to make the product until 1984 and did not conduct a safety recall until spring 1991.

Patrick Kennedy, a fire and explosions consultant, says that lawsuits against GE have claimed that "GE made a conscious decision that rather than sustain the costs of changing the design or recalling and fixing the coffee makers, [it] would absorb the costs of lawsuits and settlements."

GE finally announced a recall of the coffee maker last March, after it caused a fire in the home of a Utah family, killing two children and severely burning a third. John Clark, the owner of the home, sued GE, claiming the company was liable for the deaths and injuries. The case was eventually settled for an undisclosed amount, with GE's agreement to recall the coffee maker.

In a statement, GE acknowledged its responsibility for the fire at the Clarks' home, but asserted that it believed in "good faith" that the coffee maker did not pose a safety hazard. The complaint rate was "minute," the statement said, and "in GE's, view was significantly below the level and regulatory standards which would trigger a recall."

Tony Bruning, an attorney who has represented victims of what he has dubbed a "death trap," says he "learned during the course of trials that GE had been aware of the problem and had experienced many other claims of property damage caused by the coffee maker. [Yet] General Electric put up a vigorous defense."

Less than 10 percent of the coffee makers have been returned since GE announced its recall, and millions are believed to remain in use.

Exxon's Discount Fine

Last spring, U.S. District Court Judge Russell Stanley Holland rejected as too small the proposed settlement between Exxon and the federal and Alaskan governments for the nation's worst oil spill, which took place in Alaska's Prince William Sound on March 24, 1989. In October 1991, Holland accepted the company and governments' latest proposal, declaring that the "punishment ... fit the crime" and that Exxon is a "good corporate citizen."

But, according to a study commissioned by the Alaskan state legislature, the approved settlement will actually cost Exxon less than the rejected proposal. Taking into account inflation, the time the payments are required to be made and the tax deductions available to Exxon, the study concludes that the "real financial burden" of the new settlement is over a quarter of a million dollars less than the settlement rejected last year as too lenient.

The approved settlement calls for Exxon and its subsidiary, Exxon Shipping Co., to pay a $125 million criminal fine and $900 million to reimburse the federal and state governments' cleanup efforts. (The Los Angeles Times reported the week the settlement was approved that spill damages are likely to cost from $3 billion to $15 billion.) The rejected settlement called for a $100 million criminal fine with the same cleanup costs.

The study, conducted by financial consultant Bill Barker, concludes, "The real financial burden to Exxon of the new settlement is less than the old settlement because the company pays approximately the same sum of money but pays it seven months later."

- David Lapp