Former Westar board had strong KU ties

Topeka ? David Wittig, the Kansas University graduate who rocketed to fame on Wall Street and then returned to his roots to lead Westar, surrounded himself at the utility with fellow Jayhawkers.

Westar board directors during Wittig’s tenure included such high-profile KU types as former Chancellor Gene Budig and prominent alumnus Frank Becker.

In the last months of Wittig’s tenure at the utility, six of eight Westar directors had KU ties. In addition to Wittig, Budig and Becker they included John Dicus, John Nettles Jr. and R.A. Edwards.

Wittig, who graduated from KU in 1977 with a business degree, was found guilty Monday of 39 counts of conspiracy, wire fraud, circumventing internal controls and money laundering while running the Topeka-based company.

After Wittig was indicted, consumer representatives blamed the Westar board for failing to oversee Wittig’s corporate jet travel, lavish bonuses and bad business decisions.

“They were out to lunch,” David Springe, consumer counsel for the Citizens Utility Ratepayer Board, said in 2003.

The KU connections were so thick on the Westar board that when Westar conducted its own investigation into Wittig, its report said there were too many interrelated KU interests on the board.

“A common observation heard in our investigation was that in recent years, the board has seemed disproportionately represented by directors who share common memberships and interests in organizations associated with the University of Kansas,” the report stated. “We recommend that the future composition of the board reflect greater diversity.”

Budig and Becker have refused to speak to the media on the matter.

Reached at home Monday night, Becker declined to comment. In Wittig’s first trial, which ended in a mistrial, Becker testified that he was not fully aware of Wittig’s actions.

No board members were charged with any wrongdoing in the case against Wittig.

Of the 10-member Westar directors now, only two are KU alumni – Edwards, the president of First National Bank of Hutchinson, and former president of Douglas County Bank, and Nettles, a Johnson County attorney.

Joseph Reitz, a professor at KU who teaches business ethics and values, said boards throughout the country are seeking more diversity in light of recent scandals.

“It’s pretty hard to ask the hard questions of people who are friends, and that is what boards are supposed to do,” he said.

He said businessmen often make ethical errors when they surround themselves with people who will not question their actions.

“We are all capable of deceiving ourselves,” Reitz said. “Everybody needs a gadfly, a devil’s advocate.”

The charges

The charges against former Westar Energy Inc. executives David Wittig and Douglas T. Lake, as listed in a federal grand jury indictment returned in July 2004:

¢ Conspiracy, one count. Punishable by up to five years in prison and a fine of up to $250,000. Both Wittig and Lake guilty.

¢ Circumvention of internal accounting controls and failing to implement such controls, 14 counts. Each count punishable by up to 10 years and a fine of up to $1 million. Wittig guilty on all counts; Lake acquitted on one count.

¢ Wire fraud, seven counts. Each count punishable by up to 20 years and a fine of up to $1 million. Wittig guilty on all counts; Lake acquitted on one count.

¢ Engaging in monetary transactions in property derived from unlawful activity, 17 counts. Punishable by up to 10 years and a fine of up to $250,000. Wittig guilty on all counts; Lake acquitted on seven counts.

¢ Forfeiture, one count. Government seeks to force Wittig and Lake to return all compensation they received while at Westar and other property, including Wittig’s Topeka residence, the former home of Kansas Gov. Alf Landon, and nearly $2 million in furnishings. Testimony on this count is expected to begin today.