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Archive for Thursday, February 27, 2003

Westar executive says company awaiting investigation results

February 27, 2003

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A top executive with Westar Energy said an internal investigation about possible wrongdoings by former chief executive David Wittig was ongoing and could be completed within the next two months.

James Ludwig, vice president of public affairs for Topeka-based Westar, said the company started the investigation after Wittig was indicted in November on federal charges related to a personal loan he received from a Topeka bank.

U.S. Atty. Eric Melgren also subpoenaed company documents relating to the company's aircraft, compensation packages and other general corporate documents.

At that point, Westar hired the law firm of Debevoise & Plimpton to conduct an internal investigation to determine if there had been any wrongdoing in the company. Ludwig said the law firm hadn't made any preliminary reports but might issue its final report by April.

Ludwig said company officials haven't ruled out the possibility that serious problems might be found.

"We really don't know what it will find, but we recognize that it might have findings that are difficult for us to deal with," Ludwig said.

The U.S. Attorney's investigation still continues, and Wittig awaits trial. Ludwig said the company has not been notified of any date for the federal investigation to end.

"The U.S. Attorney is in our offices, and he can look at anything he wants," Ludwig said. "At some point, he will let the world know what he has found, but we have no idea of what that will be."

Ludwig made the comments at an editorial board meeting of the Journal-World, where he was touting the company's plan to reduce debt at the state's largest electric company by $2 billion by the end of 2004.

The plan includes the sale of all the company's nonutility businesses, including the monitored security firm Protection One. Ludwig said Westar officials still were screening potential buyers for the company. He said a sale, which could generate $500 million to $1 billion, was still on track to be completed late this year or in early 2004.

The plan currently is being considered by the Kansas Corporation Commission. The KCC has said the plan represented a "good faith effort" on the part of Westar to comply with a previous KCC order to reduce its debt by approximately $2 billion.

The KCC is scheduled to take testimony about the plan March 14. James Zakoura, with the Kansas Industrial Consumers, said his organization generally was supportive of the plan but likely would ask the KCC to consider forcing Westar either to reduce its rates or provide a partial refund of rates.

Zakoura said Westar's rates were still "excessive" because the company has never adjusted its rates downward to account for its decreased operational costs achieved by laying off approximately 600 employees in the last year and half.

Ludwig says the company believes its rates are appropriate and will urge the commission to reject any rate decrease or refund plan.

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