West Virginia’s billionaire GOP governor busted for Trump-like business corruption while in office

USA

This article was produced in partnership between the Charleston Gazette-Mail and ProPublica. By Ken Ward, Jr.

Last fall, Gov. Jim Justice called reporters to his office in the West Virginia Capitol for a hastily arranged news conference.

Sitting behind a table and flanked by GOP lawmakers, the governor touted the latest budget surplus and announced a proposed pay raise for teachers and a plan to fix the state’s underfunded public employee health care plan.

ADVERTISEMENT

But within minutes, he ended the event and dismissed the lawmakers, saying they had pressing state business. The governor took just one question.

“Nobody else? Great,” he said, banging his palms on the desk. “Let’s go.”

Justice had somewhere else to be. Across town, one of his energy companies, Bluestone Coal Corp., was due in federal court. The firm had sued a competitor for $80 million after a drilling accident had flooded a mine. And as Bluestone’s owner, Justice was playing a key role in the settlement talks. The parties spent two days negotiating a deal, and he was there when they gathered in a courtroom to present their agreement to the judge.

“May I say something?” the governor asked at one point, according to a transcript of the hearing.

ADVERTISEMENT

“Certainly,” U.S. District Judge Thomas E. Johnston responded.

Surrounded by nearly two dozen lawyers, the governor proceeded to explain the finer points of the agreement.

Justice’s involvement in his company’s legal matters is a far cry from what he pledged more than two and a half years ago when he took office as West Virginia’s governor. Back then, the billionaire promised to put his business empire aside and focus on public service. In an arrangement that echoed that of President Donald Trump, Justice said his adult children, Jay and Jill, would run his family’s coal mines, resorts and farms.

ADVERTISEMENT

“Being governor,” he wrote in a January 2017 note to state employees, “is a full-time responsibility.”

But as his courtroom appearance makes clear, Justice remains deeply enmeshed in his businesses. In fact, he has frequently used official public appearances, and the trappings of his office, to promote them.

Over the past year, he has hosted a news conference at the governor’s office to tout a settlement between his coal companies and his administration’s tax collectors. He has used an interview at the governor’s mansion to press his luxury resort’s $75 million lawsuit against its insurance companies. And he’s turned an appearance at a statewide business gathering — held at that same resort — into breaking news about his family’s plans to reopen a coal mine.

ADVERTISEMENT

The governor’s dual roles are now fueling complaints and political headaches, just as Justice is seeking a second term as the state’s chief executive. Critics in both parties say that Justice is an absentee governor, often leaving the state without strong leadership at a time when West Virginia faces key challenges, from a painful economic transition as the coal industry declines to the struggle to emerge from the worst drug overdose crisis in the country.

“The governor is running his businesses, and the state of West Virginia gets neglected as a result of it,” said Delegate Isaac Sponaugle, a Democrat who brought a lawsuit against Justice, alleging the governor is violating the state Constitution because he does not “reside” in Charleston. Justice lives in Lewisburg, near his Greenbrier resort, about 110 miles from the capital, but he has opposed the lawsuit. His lawyers say the Constitution’s term — reside — is too “nebulous” a concept for a court to enforce.

On the campaign trail, Republican rival Woody Thrasher is questioning Justice’s commitment to public office. “I think he’s a worker,” Thrasher told a Wheeling newspaper this month. “I just don’t think he works on state government. I think he works on his personal businesses, which quite frankly probably need more help than the State of West Virginia does, if that’s possible.”

ADVERTISEMENT

Justice declined to be interviewed for this report; however, he issued a statement through a spokesman for his companies.

In it, he acknowledged his ongoing involvement in his businesses but said his interactions are limited, with his adult children running day-to-day operations. “Because the businesses employ thousands of West Virginians, I continue to have an interest in their success and do check in on them from time to time,” he said. “There are also times where I have specific historical knowledge of a particular aspect of one of the businesses, and Jay and Jill will ask me about it.”

His primary interest, he added, is West Virginia.

“Above all,” Justice said, “as I travel from one end of the state to the other, my No. 1 focus is continuing to do everything I can as governor to make sure West Virginia will continue to improve, put people in good-paying jobs and attract industry and tourism to our wonderful state.”

ADVERTISEMENT

Unlike his recent predecessors, Justice has refused to place most of his holdings into a blind trust, which would put them under the control of an independent manager and shield him from at least the appearance of a conflict. Instead, the governor has retained ownership in 130 corporate entities, and his assets are valued by Forbes magazine at $1.5 billion.

Many of Justice’s businesses, from coal mines to farms to a casino, are regulated by the state, and some of them do business with the administration.

An investigation by the Charleston Gazette-Mail and ProPublica in August found that, despite what the Justice administration called a “moratorium” on state spending at The Greenbrier, state agencies have paid for more than $106,000 in meals and lodging at the luxury resort since Justice became governor.

That report prompted lawmakers to call for an overhaul of the state’s ethics rules. One proposal would make West Virginia the first state to mandate that governors place all of their assets into a blind trust. Separately, federal investigators have issued subpoenas seeking information about the administration’s dealings with Justice’s businesses.

ADVERTISEMENT

Justice has denied any wrongdoing and has repeatedly dismissed concerns about his business interests. He maintains that they present no conflicts of interest, because he has stepped away from day-to-day management while he’s serving as governor.

Justice’s own actions have undercut that argument.

In August 2018, the governor called reporters to the Capitol to talk about his business empire’s delinquent taxes. Millions of dollars in various state levies tied to Justice’s family coal operations had been overdue for years, providing frequent fodder for his political opponents and the media.

“Today’s a really neat day for me in that I think we can put to bed once and for all this tax issue that’s been looming around forevermore,” Justice said.

Speaking in the reception room just outside the governor’s office — historically used for official government press events — Justice took reporters on a rambling verbal tour of his mining holdings and the challenges of the coal industry. He spoke in detail about how he refused to file bankruptcy to avoid debts, and he outlined the back-and-forth over selling most of his coal operations to the Russian firm Mechel, before buying them back years later.

ADVERTISEMENT

“It has stretched our companies beyond belief to overcome this situation right here,” the governor said. “It’s been a struggle.”

But when reporters asked for specifics on how much his companies had ultimately paid in taxes — and whether the governor cut a deal with his own tax collectors — Justice was short on details.

“I don’t know what the amount is,” he insisted. “I think that’s a question you would really have to ask my son.” (Justice’s son, Jay, who was not at the news conference, has refused to answer such questions.)

Pressed for more information, Revenue Secretary Dave Hardy cited taxpayer confidentiality, but Justice interrupted. “I think you can tell them that it was audited,” the governor told the tax official.

ADVERTISEMENT

Two months later, Justice was focused on Bluestone Coal and its ongoing lawsuit against Pinnacle Mining Co., the operator that had flooded the mine. The negotiating session was scheduled for 10 a.m. on Oct. 2, 2018, in federal court. Justice’s official calendar informed his staff, “DO NOT SCHEDULE” on that day.

But with tensions rising over the state’s underfunded health care plan for teachers and other public employees, the governor scheduled a news conference to tout Republican accomplishments.

Afterward, Justice traveled to the Robert C. Byrd United States Courthouse, about a five-minute drive from the Capitol. Although his son, Jay, is the president of Bluestone and attended the conference, the governor was there, too. A court order required “individuals with full authority to settle the case for each party” to attend.

When the parties reached a $12 million compromise just after lunch on the second day, Justice sought to clarify the terms of the agreement.

ADVERTISEMENT

The settlement, he explained, gave Bluestone all mining rights — not some, as one of the lawyers had told the judge — to an area of the damaged mine known as the “four-seam.”

“At some point in time, there could very well be something that is worth something,” the governor said. “That’s what we negotiated.”

He added: “It needs to be all the four-seam that they have, period.”

A few months later, as West Virginia teachers went on strike for the second time in as many years and lawmakers considered additional pay raises for the educators, the governor turned his attention to another matter: the financial survival of The Greenbrier, and a major legal battle with the resort’s insurance companies over flood damage claims.

ADVERTISEMENT

Greenbrier lawyers filed the case on Feb. 15, 2019. It got little attention until a week later, when Justice gave an interview in the governor’s mansion to West Virginia MetroNews, in which he discussed his resort’s finances and the lawsuit in great detail.

“I’m a pretty smart business guy,” the governor told the news outlet.

Describing The Greenbrier as “an incredible resource for our state,” Justice explained how the flood damaged the resort, including halting several expansion projects, and opined about the quality of the property’s insurance.

“It is top of the line insurance,” the governor said. “I mean, it is the very best that money could ever buy.”

But Justice seemed to stop himself after offering those specifics. “Now, I’ve been away from it, being the governor,” he said. “Forget the governor thing. Please let’s remove me in this.”

(The Greenbrier’s lawsuit was dismissed on a technicality, and the resort then sued a consultant that it had hired to help it collect on its insurance policies. That case is ongoing.)

In August, Justice’s public and private interests came together again, at The Greenbrier. The state Chamber of Commerce was holding its annual Business Summit at the luxury resort. Much was on the agenda, from economic development initiatives to tax legislation to efforts to combat the opioid epidemic.

Surrounded by hundreds of the state’s top political and business leaders, Justice announced a new initiative, aimed at expanding the state’s natural gas and chemical industries.

But off stage, the governor pivoted to his own business dealings. Speaking with a reporter in a television interview, he gave an update on a mine that he had recently purchased in Wyoming County.

He provided a detailed account of the sequences for reopening it and putting local miners back to work.

“We are probably about three to four weeks from opening,” the governor told WVNS-TV.

“The second section will follow in about two months, and the third section will follow after that,” he added, “provided the coal market doesn’t run away from us and everything.”

Editor’s note: Ben Salango, a candidate for the Democratic nomination to face Justice in next year’s election, is a minority investor in The Charleston Gazette-Mail’s parent company. He is in the process of selling his stake.

Enjoy this piece?

… then let us make a small request. Like you, we here at Raw Story believe in the power of progressive journalism. Raw Story readers power David Cay Johnston’s DCReport, which we’ve expanded to keep watch in Washington. We’ve exposed billionaire tax evasion and uncovered White House efforts to poison our water. We’ve revealed financial scams that prey on veterans, and legal efforts to harm workers exploited by abusive bosses. And unlike other news outlets, we’ve decided to make our original content free. But we need your support to do what we do.

Raw Story is independent. You won’t find mainstream media bias here. Unhinged from billionaires and corporate overlords, we fight to ensure no one is forgotten.

We need your support to deepen our investigative reporting. Every reader contribution, whatever the amount, makes a tremendous difference. Invest with us in the future. Make a one-time contribution to Raw Story Investigates, or click here to become a subscriber. Thank you. Click to donate by check.

Enjoy this piece?

… then let us make a small request. Like you, we here at Raw Story believe in the power of progressive journalism — and we’re investing in investigative reporting as other publications give it the ax. Raw Story readers power David Cay Johnston’s DCReport, which we’ve expanded to keep watch in Washington. We’ve exposed billionaire tax evasion and uncovered White House efforts to poison our water. We’ve revealed financial scams that prey on veterans, and efforts to harm workers exploited by abusive bosses. We need your support to do what we do.

Raw Story is independent. You won’t find mainstream media bias here. Unhinged from corporate overlords, we fight to ensure no one is forgotten.

We need your support to keep producing quality journalism and deepen our investigative reporting. Every reader contribution, whatever the amount, makes a tremendous difference. Invest with us in the future. Make a one-time contribution to Raw Story Investigates, or click here to become a subscriber. Thank you.

Leave a Reply