Tuesday, March 1, 2011

Cleaning house is good but know when to stop.

As I have written about many times, even predating the Massey mines disaster that killed 29 miners last year, there are so many record keeping issues that are part of the mining industry. From the government database tracking mining disasters, to documenting safety infractions, record keeping is central to getting it right and reporting on what went wrong. But let’s leave that for a moment to talk about the latest developments in the Massey mine saga.
The security chief at Massey was indicted yesterday for covering stuff up, including destroying safety records after the 29 miners were killed. I’m not sure whose bright idea it was to “clean house” allegedly nefariously (AKA destroying evidence, or spoliation) after the guy, the company, or both knew they were in deep dodo. One thing is clear, when cleaning house happens to cover your tracks when you know (or reasonable should anticipate) there will be lawsuits or government investigations or both, that is the time to not destroy anything. Unless of course you are desirous of having a new boy friend and a limited meal plan while doing time.
Interestingly, in the case the General Counsel of Massey claimed that they advised the U.S. attorney's office “within hours of learning that documents” had been destroyed “and took immediate steps to recover documents and turn them over to the U.S. attorney's office."

Lessons-- Have retention rules that allow you to clean house. Cleaning house is good cause it gets rid of the crud to allow you to be a more efficient business. However, at the first smell of trouble stop cleaning house and preserve everything that may be potentially relevant if you have a lawsuit, investigation or audit coming.

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