Westar to face Texas charge

Campaign contribution called illegal

Topeka-based Westar Energy was indicted Tuesday by a Texas grand jury, which accused the Kansas utility company of making an illegal campaign contribution to a political action committee formed by U.S. House Majority Leader Tom DeLay.

Westar was one of eight corporations indicted along with three individuals associated with Texans for a Republican Majority, a PAC that assisted candidates for the Texas Legislature.

DeLay was not charged, though a related ethics complaint remains pending against him in Congress.

“What has emerged is the outline of an effort to use corporate contributions to control representative democracy in Texas,” Ronnie Earle, district attorney for Travis County, Texas, said at a news conference Tuesday.

Texas law makes it a felony for corporations and labor unions to make political donations. A corporation convicted of violating the law could face a fine of up to $20,000 — or more, if a judge determines the company profited from the donation.

Westar officials on Tuesday acknowledged the company made a $25,000 to the PAC in May 2002, but they denied wrongdoing.

“Under federal law, it was a permissible contribution,” said Jim Ludwig, Westar’s vice president of public affairs. “There is no basis for Westar to be held accountable for how others spent the money after the company gave it.”

Ongoing problems

Tuesday’s indictment is Westar’s latest problem stemming from the leadership of former CEO David Wittig. Wittig resigned in November 2002 after he was indicted on charges of falsifying bank documents related to a $1.5 million personal bank loan. He was found guilty of the charge in July 2003.

Federal prosecutors also have charged Wittig and Douglas Lake, the company’s former executive vice president, of looting the utility during their tenure. Trial on those charges is scheduled next month.

Westar, with about 654,000 customers, is Kansas’ largest electric utility, but its debt ballooned during the 1990s because of efforts under Wittig to diversify, particularly into monitored security alarm services through an 88 percent share of Protection One.

The indebtedness sparked action from the Kansas Corporation Commission, which ordered Westar to improve its finances. KCC members worried that ratepayers might get stuck paying off debt from the company’s nonutility operations.

video Former executives at Westar request charges be dropped (08-11-04)text Judge delays trial for former Westar executives (07-28-04)text Revised Westar charges issued (07-15-04)text Westar’s Lake wants separate trial from Wittig (06-27-04)

The company’s stock price collapsed under the debt burden, prompting lawsuits from shareholders and retirees. Those lawsuits are pending.

Buying access?

After Wittig’s departure, company officials commissioned an investigation of campaign contributions and other activities of Westar and its officers during Wittig’s tenure. One internal Westar memo revealed in the 367-page report suggests the company, through its campaign contributions, was buying “a seat at the table” of a congressional conference committee working on legislation that would have affected Westar.

The company turned the report over to the Federal Elections Commission for review.

Despite that report, one critic of the company said he was surprised by Tuesday’s indictment.

“It’s always possible for somebody to make a mistake, but they’ve usually exercised a lot of care in those (political contribution) situations,” said Jim Zakoura, an Overland Park attorney representing large Westar customers. “So I’m surprised.”

David Springe, chief counsel for the state’s Citizens’ Utilities Ratepayer Board, said his group would be watching to ensure Westar didn’t force customers to pay the company’s legal bills in the latest case.

“It should not have an impact on rates,” Springe said. “These are not the type of costs we would expect the (Kansas Corporation) Commission to allow into consumer rates.”

No timeline was given for bringing the Texas cases to trial.

Members of the U.S. House Ethics Committee said Monday they would take up the complaint against DeLay in “the near future.”

Individuals indicted Tuesday in Texas for involvement in illegal campaign contributions:¢ Warren Robold, 48, of Maryland, a fund-raiser for Texans for a Republican Majority, is charged in nine indictments with making and accepting corporate contributions prohibited by the Texas Election Code.¢ John Colyandro, 40, of Austin, Texas, executive director of the PAC, is charged in 13 indictments with unlawfully accepting corporate contributions. In a 14th indictment, he is also charged with money laundering.¢ James Ellis, 47, of Virginia, described as “connected to” the PAC, is also charged with money laundering, a first-degree felony.Corporations indicted:¢ Questerra Corp., a Charlottesville, Va.- based subsidiary of Meadwestvaco Corp., charged with making two contributions.¢ Diversified Collection Services Inc., a San Leandro, Calif.-based debt-collection company.¢ Sears, Roebuck & Co., an Illinois-based retailer.¢ The Williams Cos. Inc., a Tulsa, Okla.-based natural gas company.¢ Bacardi U.S.A. Inc., a Miami-based subsidiary of the Bahamas-based liquor producer.¢ Cracker Barrel Old Country Store Inc., a Lebanon, Tenn.-based subsidiary of CBRL Group Inc. that operates restaurants and retail operations in 41 states.¢ The Alliance for Quality Nursing Home Care Corp., an umbrella organization of some of the nation’s largest nursing home operators.— Source: Travis County (Texas) District Attorney’s Office.