Defense: Westar board knew about CEO’s benefits

Board member says he was not fully aware of Wittig's dealings

? Former Westar Energy Inc. chief executive David Wittig was not secretive about his financial dealings and benefits, defense lawyers argued Thursday in Wittig’s federal fraud trial.

During cross examination, Adam Hoffinger, an attorney for Wittig, tried to show that former Westar board member Frank J. Becker knew, or should have known, about benefits and investments made during Wittig’s time at Westar.

Becker, in his second day of testimony, was the fourth witness called by Assistant U.S. Attorney Richard Hathaway. Wittig and Douglas T. Lake, a former Westar executive vice president, are charged with looting Topeka-based Westar, the largest electric utility in Kansas. Each man is facing 40 counts and at least 10 years in prison.

Hoffinger argued that the board, including Becker, had been apprised of a split-dollar life insurance policy that Wittig used to collect $2 million in 2002. The policy had a “put” provision that paid executives $1 for every $1.50 in death benefits they sold back to the company.

Under direct examination Wednesday, Becker testified that he was not made fully aware of the nature of the policy. Becker maintained that position Thursday.

Hoffinger also said Becker never complained to John Hayes, Westar’s former chairman, about the acceleration of Wittig’s signing bonus that allowed him to receive $5.3 million in 1999. The information was disclosed in financial filings in 1998, that, Hoffinger argued, Becker would have read in his duties as a board member.

“You didn’t run to John Hayes and say, ‘Stop the presses,’ or anything like that,” Hoffinger said. “You didn’t say, ‘John, what have you done?”‘

Earlier in the day, Hathaway used Becker’s testimony to show that Westar had invested $2 million in KMF, a hedge fund, through its Bermuda subsidiary. Becker testified that he had no knowledge of the investment.

The investment in KMF proved to be particularly harmful to Westar, which saw its initial $2 million dwindle to about $185,000 by September 2002.

But on cross examination, Hoffinger said a number of high level executives knew about the investment and that it was reflected in Westar’s financial documents.

“As far as you know, it was reported right where it should have been,” Hoffinger told Becker.

The trial, which began Oct. 19, is expected to last 10 weeks.