Topeka ? If you’re a customer of Westar Energy, the state’s largest utility company, you may end up helping pay the legal expenses of former Westar executives David Wittig and Douglas Lake.

The two have been accused by federal prosecutors of looting the state’s largest utility for personal gain. But they will have their legal expenses paid, at least for now, by Westar, officials said Tuesday.

“It could be millions and millions of dollars, and we are just at the beginning of the process,” said David Springe, chief attorney for the Citizens’ Utility Ratepayers Board.

While the legal fees technically are not included in the rates consumers pay Westar for electricity or natural gas, Springe said, the company’s major source of cash is the bills paid by its customers.

Legal fees apparently have become an issue in arbitration between Westar and the executives in sorting out tens of millions of dollars in employment compensation agreements.

The arbitration case was filed earlier this year by Westar. As much as $100 million in pensions, severance pay and other benefits is at stake. The arbitration proceedings have been confidential.

But Westar issued a statement saying “it appears that Westar’s articles of incorporation and relevant legal precedent may obligate Westar to advance legal fees and expenses incurred by Mr. Wittig and Mr. Lake in connection with defending the criminal proceedings initiated by the U.S. Attorney’s Office in Topeka, Kansas, and certain civil actions pending in the U.S. District Court in Kansas.”

Attorneys for Wittig and Lake have demanded those fees be advanced, but none has been yet, Westar said.

Westar said it wanted Wittig and Lake to sign statements saying they would pay back the money if it were later determined they were not entitled to it. Attorneys for Wittig and Lake did not return telephone calls for comment.

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Indictments, lawsuits

Earlier this month, a federal grand jury handed up a 40-count indictment accusing Wittig and Lake of conspiring to “systematically loot” Westar of money and assets.

Wittig, the former chief executive officer, resigned in November 2002 after he was indicted on federal fraud charges related to a $1.5 million personal loan received from a Topeka bank. He was convicted and awaits sentencing set for Feb. 27. Westar said it would not pay any legal expenses connected to the bank loan case.

Lake, the former executive vice president and chief strategic officer, also resigned in late 2002.

Also pending in U.S. District Court in Topeka is a lawsuit alleging fraud filed by two pension funds against Westar, Wittig, Lake, former executives, former directors and a current director.

The defendants have asked U.S. District Judge Julie A. Robinson to dismiss the lawsuit. In a request filed with the court, attorneys for Wittig said the lawsuit was “overflowing with tidbits of trivia” and was not specific enough to go to trial.

Lake left the company last December. At the time, Westar said he was on indefinite administrative leave, but Lake’s attorney has described him as being fired.

Westar claims

The dispute between the two men and Westar is being mediated by the American Arbitration Assn. Westar’s statement did not comment on the arbitration.

Westar wants Wittig and Lake to repay more than $33 million in compensation they earned from 1998 until they left the company. Westar also claims the two men owe the company an additional $10.4 million for damages they inflicted.

In addition, the company wants to avoid paying $58.8 million in compensation due under terms of its employment agreements with Wittig and Lake. Those payments would continue through the men’s lifetimes.

The company is expected to argue the executives engaged in fraudulent behavior against the company, invalidating the employment agreements.

James Zakoura, an attorney for Kansas Industrial Consumers, said the disclosure that the company would have to advance legal expenses was an argument to make public the arbitration proceedings.

Shares of Westar were up 14 cents to close at $20.25 in trading Tuesday on the New York Stock Exchange.

The Associated Press contributed to this report.