PITTSBURGH—A disastrous explosion and fire knocked out essential air pollution control systems at U.S. Steel’s sprawling Clairton Coke Works, resulting in months of illegally high emissions (see story on page 1). And a class action securities fraud lawsuit filed against the company by its shareholders this past April suggests this disaster was no “accident.”
According to that lawsuit, U.S. Steel responded to revenue losses by implementing a new plan, called the “Carnegie Way,” purportedly designed to change the company’s direction. The plan promised employee engagement, proactive maintenance, and improved operations.
But in reality, U.S. Steel shareholders allege, the Carnegie Way was nothing more than a “sham”: The plan cut costs to the bare minimum, delayed essential repairs, and replaced veteran workers with cheaper, less trained ones while company executives artificially padded the short-term bottom line to inflate the value of their stock. With the stock price inflated, the suit alleges, the executives dumped their own shares while normal shareholders were left holding the bag.