MORGANTOWN – Gov. Jim Justice confirmed Tuesday that he is personally liable for $700 million in loans taken by his coal companies from a lender in the United Kingdom that went bankrupt.
The Wall Street Journal first reported Justice’s debt Monday. He answered questions about it posed by several reporters during Tuesday’s COVID-19 briefing.
Greensill Capital U.K. sold the loans to investment funds managed by Credit Suisse Group AG, which froze the funds in March and is in talks with Justice’s Bluestone Resources Inc. and other borrowers to get paid, the Journal reported.
Justice said Tuesday the loans were acquired to rebuild Bluestone after a period of decline. The Roanoke, Va.-based company mines metallurgical grade coal used for steel making.
Bluestone sued Greensill, a supply chain finance firm, after it went under in March over allegations of fraud.
The Financial Conduct Authority, Britain’s financial regulatory body, announced a formal investigation into Greensill’s collapse after receiving allegations it said were “potentially criminal in nature.”
Justice said Tuesday he hadn’t read the Journal story but was told about it.
“If you knew all the details you’d know that evidently Greensill is a bad, bad actor, and you know almost in partnership with the Credit Suisse people,” Justice told reporters.
Asked for clarification on his obligations, he said, “I did personally guarantee the loans. The loans have always been personally guaranteed,” from the time they flowed from Carter Bank to Greensill. “We didn’t do anything wrong.”
Justice recounted briefly how Bluestone “melted down” under the Russian owners, Mechel OAO, who’d bought the company from him and from whom he repurchased it. The Russians left Bluestone with reclamation, union pension, tax and vendor liabilities. Led by Justice’s son, Bluestone is repaying those liabilities, he said.
He recounted that Greensill held a meeting with his son, assured him everything was going great, then filed for bankruptcy just two days later.
“It is absolutely a mess, that’s for sure,” he said. “And it is a burden on our family beyond belief, and we’ll have to deal with it.
Later in the day, the Justice family announced through Bluestone’s media department the family and affiliated entities brought a legal action against Carter Bank and its directors for violations of covenants of good faith and fair dealing, breaches of fiduciary duty, and federal banking law designed to prevent anti-competitive behavior.
The family said it is seeking $421 million in damages. “This legal action relates to the conduct of Carter Bank since the 2017 death of the founder of Carter Bank, Worth Carter, which has diverged totally from the prior relationship of trust and transparency.”
Justice’s businesses face several other woes, including penalties totaling $3.2 million from the federal government and lawsuits over claims his companies failed to deliver coal.
“Our companies are good and they’ve done the right stuff,” he added. “It’s very unfortunate and truly it’s a pain, that’s all there is to it.”
