(The following article by Kate Turnbow was posted on the Capital Journal website on October 12.)
PIERRE, S.D. — The ownership of the Dakota, Minnesota, and Eastern Railroad has been an enigma for those affected by the railroad’s expansion through Wyoming and South Dakota to transport coal from the Powder River Basin.
But through much effort, one rancher in Wyoming did get his hands on a list of DM&E stockholders back in 1998.
Even though the list is eight years old, Kevin Schieffer, DM&E’s president and CEO, confirmed that the list of stockholders has not changed since then.
Donley and Nancy Darnell, the original recipients of the list, have fought the DM&E over the use of their land to expand the railroad line through Wyoming, and Nancy Darnell chairs a group called Mid State’s Coalition for Progress, which has worked against the DM&E’s proposal.
A meeting back in the summer of 1997 is what began the Darnell’s fight.
“There was a little piece in the paper that said (the DM&E) was going to have a meeting about a railroad coming through, and we thought we should go to it because we live right there,” said Nancy Darnell.
She said that at that original meeting what struck her the most was Schieffer did not have a map of the proposed railroad line on it’s southern route.
“He gave me some crummy excuse about how he lost the map,” she said.
For those with knowledge of the stockholders list, the major concern has been the fact that the majority of the shares are owned by foreign companies, mainly from Britain and Scotland. On the list obtained by the Darnell’s, 94,500 shares are owned by Scottish Eastern Investment Trust, which is based in Edinburgh.
Also owning a large sum of shares is Candover Investments PLC, a company that specializes in arranging and leading large buyouts and buyins and that has offices in Great Britain and Europe.
While Nancy Darnell said that she has no problem with foreign money being brought into the DM&E, the real issue in her mind is that, to her, foreign ownership means that the company is being run by one man, Kevin Schieffer.
“While there’s nothing illegal about foreign stockholders – and in fact that happens all the time – but when you have shareholders so far away, they don’t have any personal interest in the company. They don’t know what’s happening, so whatever Kevin says to them they believe. They are completely uncaring owners, and unless Kevin goes completely flat broke, they have no interest,” said Nancy Darnell. “It’s like Kevin owns the whole company himself.”
Darnell said she became interested in DM&E’s stockholders in part by Schieffer himself.
“The major reason is that at all the meetings we went to, people would always ask, ‘Well, who owns the DM&E,’ because people thought it may be a subsidiary of (Union Pacific) or Burlington Northern,” Darnell said. “And Mr. Schieffer would always look at them with a big toothy grin on his face and say ‘We are a private company so we do not have to tell you that information,’ and then he would grin.”
Darnell said she was most intrigued by Schieffer’s response to the question.
“And (Schieffer) was so arrogant about the fact that he didn’t have to tell us,” said Darnell.
As a private company the DM&E is not required to disclose any stockholder information, that is, unless that company is a railroad, because the South Dakota constitution states that the company’s stocks and stock transactions are then subject to public inspection.
Nancy Darnell explained how this piece of information was found.
“There was a little lady from up by Blackhawk. She was a modest, quiet little woman, and she discovered this. At a meeting she read that out of the constitution and said, ‘So you have to tell us, Mr. Schieffer.’
“(Schieffer) went ghostly pale white, and Thune was on the stage with him and said, ‘Kevin is that really right?’ But he was so pale and shaky that he couldn’t even answer.”
Darnell also said that in retrospect this wasn’t the best way to go about getting the ownership information.
“We always thought that someone who should not have owned shares in that company did, but by the time we were actually able to look at the list, it was covered up. And because a number of the companies that have stock in it are private companies themselves. You can’t ask about who has ownership in them.”
Schieffer responded to these allegations by saying, “It hasn’t been a secret, it was published as part of our STB application back in 1998, and we do what is required of us by law, not by what our opponents manufacture. You start chasing your tail once you start jumping through opponents’ hoops.”
He continued by saying that the company is very proud of its British shareholders.
“They have been allies that have helped save the railroad, and they took a lot of risk to do it. We couldn’t get anyone else to put up the money, it was so risky. Nobody thought this railroad would survive six months let alone 20 years,” Schieffer said while giving a short history of the DM&E.
Looking back at their history with the DM&E and what has driven the 10-year long fight for land, Darnell added, “As soon as we investigated the company we were appalled by the arrogance and the lack of real railroad knowledge.