John W Snow was named Secretary of the Treasury by George W Bush in 2003 after having been CEO of CSX railroad prior to that. In effect he was awarded a position of public trust after having flagrantly violated a position of public trust, a policy typical of President Bush. As CEO of CSX, Snow was directly responsible for a policy of neglecting safety and maintenance measures which led to the death of police sergeant Paul Palank.
In July 1991 Mr. Palank was aboard the Amtrak Silver Star heading from Florida to New York to meet his wife and children for a family reunion near Washington, DC. Palank loved trains as much as he feared flying. As the train approached the town of Lugoff, SC, it crossed over the Orlon switch named after the synthetic fiber that was produced by the DuPont Company at a nearby chemical plant. A train with a string of empty hopper cars waited on a parallel track as the Amtrak train crossed the Orlon switch traveling two miles an hour below the posted speed limit. The first twelve cars passed safely over the switch, and then it broke. Six passenger cars hurtled off the tracks. The impact flipped over the first hopper car whose hardened steel wheels cut like a knife through the metal skin of the passenger cars. By the time everything came to a halt, 77 people were injured and 8 were dead including Sergeant Palank. He was 35 years old.
Angelica Palank was waiting in Washington with her children. Frantically, she searched for her husband. A ticket clerk gave her an 800 number to call and pointed her to a pay phone. A stranger's voice delivered the horrible news. In the weeks ahead, most of the families of the injured and dead settled their claims with the railroad discovering in the process how modest their payments were. Only Angelica Palank refused to go along. She did not believe her Paul had died because of some random bit of misfortune no one could have foreseen so she sued.
Undergoing much hardship, Angelica managed to get her case heard before the National Transportation Safety Board. It was quickly deduced that the accident was not a chance happening but was caused by improperly done repairs. CSX maintenance crews had used a rusty nail to hold the switch together instead of a proper pin and jury-rigged shims. CSX had cut corners to inflate profits which meant riches for its CEO whose pay package was tied to profits and stock price.
CEO John W Snow was an early champion of markets as the most efficient regulator of transportation industries. Under his leadership, the railroad aggressively cut costs including maintenance. Palank and her lawyers dug deep into the cutbacks on safety and eventually found two CSX workers who would talk. Allen Clamp testified that his boss never "performed a disassambly inspection, never walked a switch, and conducted no inspection, or inadequate inspections." He said under oath that he was instructed to falsify inspection reports. It turned out that CSX had knowingly neglected to repair the switch for 10 years in order to save money. Every day CSX trains loaded with toxic chemicals crossed over that switch as did Amtrak passengers.
The jurors awarded Angelica and her children $50 million in damages and a judge delivered a stinging rebuke to CSX: "The clear and convincing evidence shows that Silver Star No. 82's tragic derailment was caused by willful, wanton negligence." Although Angelica Palank was successful in getting upwards of $50 million dollars, most of which she donated to charity in her husband's name and despite numerous appeals by CSX, CSX viewed the settlement as just a minor cost of doing business. For every dollar it had cut on safety and despite 8 lives lost, CSX only had to give back 4 cents on the dollar.
But the saga for CSX only got better. As it turned out, in the final analysis, CSX paid nothing for its recklessness. There were no consequences. CSX simply sent the bill to Amtrak for reimbursement! It sought and got from US taxpayers the full amount including punitive damages that it had been required by the courts to pay for the dead and injured. A federal law shields the freight railroads over whose tracks Amtrak operates from any responsibility in claims arising from Amtrak passengers. Under federal law all claims, even in cases where Amtrak was not at fault, must be paid by Amtrak. What this means is that CSX and John Snow got off scott free despite their culpability because an Amtrak train and not a freight train was on the switch when it failed.
So CSX made out like a bandit and its policy of driving up its stock price by neglecting maintenance proved successful. John Snow went on to be Secretary of the Treasury and was in effect rewarded for bad behaviour, something that George W Bush seemed to value in his appointments especially to regulatory positions.
John Snow's Wikipedia entry states:
In his drive for efficient capital investment,Snow cut $2.4. billion between 1984-1993. Part of the savings was effected by using 3 instead of 4 engines on some hauls. Other savings were effected by huge deferred maintenance and deferred safety measures. CSX was found guilty of flagrant violation of the public trust in the infamous Orlon switch case which resulted in punitive damage fines of $50 million which CSX was able to pass on to Amtrak which was operating the train involved, though it was found faultless.
Part of CSX, CSX Lines was sold to The Carlyle Group, early in 2003. After Snow left the company for the White House, CSX sold its international port operations to the UAE company, Dubai Transport.
This account owes a lot to the book "Free Lunch" by David Cay Johnston. The subtitle is "How the Wealthiest Americans Enrich Themselves at Government Expense (And Stick You With the Bill)".
