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Archive for Friday, August 5, 2011

Former Westar exec gets $36 million settlement with utility

Wittig will also get $3.1 million in legal fees and $2.7 million in stock compensation

August 5, 2011, 10:06 a.m. Updated August 5, 2011, 10:59 a.m.

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— Former Westar Energy executive David Wittig will receive $36 million plus legal fees to settle a long-running dispute with the utility company.

Wittig served prison time for a bank case before federal charges that he looted Westar were dropped.

The Topeka Capital Journal reported Thursday that the settlement also will give Wittig $3.1 million in legal fees. The company also will release $2.7 million in stock compensation to Wittig. An arbitration settlement was completed in July, the utility said.

Westar spokeswoman Gina Penzig said the sum will be paid with money shareholders set aside, not by ratepayers.

"We believe this closes the chapter," she added.

Wittig and former top strategy officer Douglas Lake were indicted in 2003 on charges they conspired to inflate their compensation at the Topeka-based company and then tried to hide their actions. They also were charged with wire fraud and money laundering.

The first trial ended in mistrial when jurors couldn't reach a verdict. Convictions stemming from a second federal trial were overturned by the 10th U.S. Circuit Court of Appeals in Denver.

Federal prosecutors filed new charges against Wittig and Lake, ultimately dropping the criminal case in August 2010. Wittig faced one count of conspiracy and 14 counts of circumvention of Westar's internal financial controls. Lake, of New Canaan, Conn., faced one count of conspiracy and 13 counts of circumvention of internal financial controls.

Lake settled with the company this spring for $21 million and $5.3 million in legal fees.

Dan Lykins, a Topeka attorney and Westar shareholder for more than 25 years, has been critical of Wittig for years. He said the outcome was expected, though he was "extremely disappointed."

"I knew with him basically winning in court, I knew he was going to get a huge payday from Westar Energy," Lykins said late Thursday in a telephone interview.

Lykins, also a member of the Kansas Board of Regents, said he was disappointed Westar's board of directors didn't take steps to control Wittig's actions while he was running the company.

The two former executives claimed the Topeka-based Westar owed them compensation because the utility ended their employment contracts early, as well as for legal fees incurred while defending themselves in federal court on Westar-related charges.

Westar had set aside nearly $90 million to cover Wittig and Lake's claims, according to the Kansas Corporation Commission, which regulates utilities.

"Westar shareholders will pay the dollar amounts associated with this settlement, not customers," KCC Chairman Mark Sievers said. "Not through increased electric rates or billing fees, or any other means, now or in the future."

Lykins said even though the settlement is paid by money the shareholders set aside, those funds are raised by utility bills paid by customers who purchase electricity, "so indirectly everyone's paying."

Wittig served time in federal prison for an unrelated banking case not tied to his tenure at Westar.

Comments

beaujackson 2 years, 8 months ago

I did own 400 sh., & watched them drop from 40 to 7.

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beaujackson 2 years, 8 months ago

Wittig and Lake are just as innocent as OJ.

The Board that allow this to happen also included Capitol Federal owner, Henry Bubb's, son in law, Jack Dicus who was smart enough to resign before the s--- hit the fan.

Wittig cost KPL stockholders millions, & he should rot in hell.

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purplesage 2 years, 8 months ago

I have long wondered how common this sort of behavior is? I think upper level execs at many corporations abuse their privileges just like this pair. Every few weeks, another congressman makes the news for such actions. It is commonplace; that doesn't make it right.

If they did "loot" to company, this provides ironclad evidence of the same.

Anyone know where these thieves live today and what they are doing?

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Ken Lassman 2 years, 8 months ago

http://www.epubbud.com/read.php?g=CXRZT549&p=5

Do a search for "Wittig" in this "book" and find some interesting perspectives

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SDTPlant 2 years, 8 months ago

Wittig is a convicted criminal. He conspired with Odell Weidner, who is still in jail I believe, for the scam in AZ. Now, he's rewarded with $36 million plus for his time at Westar? My guess is now, here in Brownbackistan, he'll be rewarded with a government job by the lord of the fiefdom.

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tbaker 2 years, 8 months ago

Sounds like a lot of people have a problem with the concept of the rule of law. What part of "the charges were dropped" don't people get? Not a single poster to this blog would want to be subject to the mob rule they seem to think this guy deserves. Thats why the lady holding the scales of justice is blindfolded. Scumbags and saints are all equal under the law. Think about that the next time you try to weasel out of jury duty.

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Les Blevins 2 years, 8 months ago

Gosh, Wittig was right, Westar is his cash cow after all. I say this makes it time to end the power company's monopoly.

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Dolph4 2 years, 8 months ago

I heard that this Wittig character was funneling money to the contras in the '80's as well. All these fat-cats scratch each others backs. Just disgusting what our world is coming to.

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tooltime59 2 years, 8 months ago

How much time did they serve?

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Richard Heckler 2 years, 8 months ago

Private industry is the most reliable source for fraud and golden parchutes.

In 2009 it was discovered that the medical insurance industry billed consumers for matters that should have been paid by the medical insurance industry. This cost consumers billions upon billions of dollars. Has anyone received a refund? Why not?

Why privatize public schools,Social Security,Medicare,State Government jobs etc etc.? Why support fraud and white collar criminals?

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Joe Hyde 2 years, 8 months ago

Surely there's a special instruction manual that can only be purchased by newly hired Chief Executive Officers of utility companies -- a manual that details methods whereby egocentric CEOs willing to endure a bit of easy jail time can sucessfully raid the coffer of any utility company that hires them? If there actually exists such an instruction manual "The Westar Gambit" would be a most useful new chapter addition prior to that manual's next updated publication.

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billybob1 2 years, 8 months ago

How about those board members. Where are Frank Becker and Gene Budig?

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happyrock 2 years, 8 months ago

I realize that Dophus Dolph controls everything we read, but it would certainly be interesting to hear what Wittig has to say now. There isn't even a no comment.

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KEITHMILES05 2 years, 8 months ago

Hathaway was the lead prosecutor.

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ShePrecedes 2 years, 8 months ago

Wittig sat in on Cheney's energy task force. I hope he writes a book about what was said and decided during that task force. I want him to talk about it.

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jafs 2 years, 8 months ago

The last time I looked at this situation, it appeared that the law was changed during the trial - otherwise these two would have been found guilty.

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Number_1_Grandma 2 years, 8 months ago

"Westar shareholders will pay the dollar amounts associated with this settlement, not customers," KCC Chairman Mark Sievers said. "Not through increased electric rates or billing fees, or any other means, now or in the future."

Riiiiiggggghhht

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Kontum1972 2 years, 8 months ago

well folks looks like are rates are going to go up.......since these guys cutt into Westar's profit margin...

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smitty 2 years, 8 months ago

US (attorney) prosecutor, Marietta Parker, wrote the challenge to Wittigs and Lakes appeal that failed so badly.

Parker is the same prosecutor in the YH appealed conviction.

No wonder she couldn't get that judge appointment and was encouraged to retire.
.

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happyrock 2 years, 8 months ago

This comment was removed by the site staff for violation of the usage agreement.

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LHS56 2 years, 8 months ago

I fault the Board of Directors for allowing this to happen. I believe they were paid $50,000 per year plus expenses. I would hope for that compensation at least one of the Board Members would have noticed the six million dollars "remodel" to Wittig's office and meeting room. Ohhh...and also the agreement on his home....Landon House....where the Board agreed to purchase the home for 15% above his cost. I don't know the amount he paid Fritzel Construction for the remodeling but I understand it was int he seven figure amount. Wittig and Lake were east coast crooks. However, per the terms of their employment agreement, they were within the law. Blame the Board of Directors. They should be held accountable for this huge lose to the Westar stockholders and customers.

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camper 2 years, 8 months ago

There are some good CEO's out there. And yes it is easy for small guys like me to debate their worth, but the good ones are great strategic planners, good communicators, good leaders, good organizers and basically a good spokeperson(s).

However, it seems to me that while most of them have these qualities, they don't use them because they are all about short term appreciation of the stock value. So often this leads to the demise of many a company and the sacrifice of long-term health of the business. Most boards are not interested in 10-year business plans. Sadly. They want to cash in now.

For this reason, it is foolish to grant absurd salary contracts to most ceo's. The multiple mansions and vacation homes, the limited amount of time they are in the office, and when they do leave, nobody notices of which, leads one to believe that they are essentially worthless.

So to the few good CEO's who are not lacky's for the board, I apologize. But for most, I don't give a darn about, and novbody will miss you when you leave the CEO post.

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Uhlrick_Hetfield_III 2 years, 8 months ago

This comment was removed by the site staff for violation of the usage agreement.

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Paul Geisler 2 years, 8 months ago

Before you start with this speechless talk and OMG this and that I suggest you go back and read 9 years worth of news and legal reports like I did so you can understand why Westar didn't have a chance after the Feds dropped their case. It's called an employment contract and that's what large corporations do when they hire an executive. And many of those agreements require that any compensation disputes be resolved by Arbitration. This isn't unique to Westar or Wittig & Lake. If you want someone to blame, Westar's BOD allowed all of this to happen and then tried to point the fingers at Wittig & Lake as the only ones responsible for their increased executive compensation. Then when they started taking some heat for Wittig & Lake the BOD thought they'd be better off if they served up these two guys on a silver platter to the Feds and give them a slam dunk case. Boy, were they wrong! The Feds were arguing a case for over 8 years that had no legal merit, with a lead prosecutor hell-bent on their convictions and a judge who resented them for their lifestyles. The Appellate Court clearly saw that and so did the Feds after the recent Supreme Court ruling. Also, several years ago Westar set aside $90M out of their shareholder profits (dividends) to cover these compensation disputes with Wittig & Lake so they actually have $22M left over after these two settlements are paid. So please don't start whining about how they are going to raise your rates again because of these settelements! The KCC determines Westar's rates and they aren't going to approve one now just because of these payouts. I would consider this to be the final chapter in a painfully long saga. I do not agree with everything that Wittig & Lake did while running Westar, but I don't believe they did anything illegal. Maybe those laws should be changed, but you can't allow prosecutors and judges to make them up in court.

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irvan moore 2 years, 8 months ago

now you know why we're gonna get stuck with smart meters, they gotta make it up somewhere.

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camper 2 years, 8 months ago

Good work while you can get it.

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bobberboy 2 years, 8 months ago

is this why my electric bill has been so high for the last year & 1/2 ?

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billybob1 2 years, 8 months ago

Good for Wittig. WR spend $225 million on a witch hunt. When do they get indicted?

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klumsom 2 years, 8 months ago

I retired from kpl/westar in 1992 and have not received one cent raise in the nearly 20 years. now this crook walks with millions, how is that for justice.

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rockchalker52 2 years, 8 months ago

yowzah! that is one electric settlement.

meanwhile, somewhere in the justice system: we're sorry we kept you wrongfully incarcerated for 30 years, Mr. Poor Person. Here's a few hundred bucks & a bus ticket. You should check with Mr. Wittig. Perhaps he needs a gardener.

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HollisBrown 2 years, 8 months ago

That's it. I've been broke long enough. Time to start breakin' the law. While your average Joe who serves 20 years for a crime he didn't commit gets a big "Oops. We're sorry."

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consumer1 2 years, 8 months ago

speechless!!! Rather, who say's crime doesn't pay...

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demonfury 2 years, 8 months ago

What, no comments ??? This is classic corporate scandal at it's best. Big company gets screwed in the end for trying to cover up losses by blaming the executives. Cost them a cool 68.1 million plus their own legal fees to lose bigger than they ever thought they would win !!!!

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