Archive for Saturday, May 14, 2011

Ex-Westar executive to receive $21M

May 14, 2011

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— One of two top Westar executives accused eight years ago of trying to loot the Kansas utility has reached a settlement with the company that will give him $21 million in unpaid compensation and $5.3 million for attorney fees.

The settlement between Douglas Lake, former top strategy officer for the state’s biggest electrical utility, was announced Friday after Kansas regulators issued a statement saying Westar customers won’t pick up the tab for the deal, which was reached in arbitration.

Lake and former Westar CEO David Wittig were forced out of their jobs in 2002 and indicted by a federal grand jury the next year. They were charged with conspiring to inflate their compensation at the Topeka-based company and taking steps to hide their actions. They also were charged with wire fraud and money laundering.

A first trial in 2004 ended in a hung jury. The two were convicted in a second trial in 2005, but the U.S. Circuit Court of Appeals threw out the convictions, saying prosecutors didn’t prove enough evidence of wire fraud and money laundering.

Lake and Wittig were awaiting a third trial on the conspiracy and circumvention of internal controls charges last August when prosecutors dropped the case.

Arbitration related to the men’s employment contracts and their termination began after they were fired from the company, but was put on hold while the federal case worked its way through the legal system. Westar spokeswoman Gina Penzig said it resumed last fall after the case was dismissed.

Penzig confirmed Lake’s $26.3 million settlement to The Associated Press but said much of what was discussed in arbitration remains confidential. On Friday, Westar filed documents with the Securities Exchange Commission stating that as of March 31, the company had compiled $81.4 million for compensation not yet paid to Lake and Wittig, and $8.3 million for legal fees and expenses.

As a result of arbitration, the filing said, those funds were reduced to roughly $21 million and $5.3 million, respectively.

Arbitration involving Wittig, who according to prosecutors was paid more than $25 million in compensation and benefits during his tenure with the company, has not been completed.

The settlement came to the media’s attention Friday when the Kansas Corporation Commission chief sent out a news release promising that Westar customers wouldn’t pay any of the compensation or legal expenses awarded in the deal.

Comments

Patti Hadl 4 years, 1 month ago

well is the customers didn't pay for it, where did the money come from?

Richard Heckler 4 years, 1 month ago

How is it ratepayers won't pay for the golden parachute going to a white collar crook?

Mike1949 4 years, 1 month ago

Did they get off the hook because their case wasn't strong enough or the prosecutors were idiots? Either that or crime does pay!

just_another_bozo_on_this_bus 4 years, 1 month ago

This is clearly appropriate. Because we know for a fact that without the tireless efforts of Misters Lake and Wittig, the power grid in Kansas would have collapsed.

If not for these two superhumans, we wouldn't have the electricity necessary to post on this forum.

We should be thankful for all the CEO's who make life possible for the little people. These two men clearly earned their $mega-millions, and even if we have to lay off all of those overpaid linemen who get things hooked up again after a storm to pay them, remember, they EARNED this money. It's God's perfect plan that they be paid in full.

camper 4 years, 1 month ago

Nope, the Board of Directors are a bunch of country club fat farts who only have to go to executive meetings every quarter or so. They are a worthless layer of priviledged cronies who have nothing to do with the day to day operations of the business.

I describe the worst case scenario of a board. But any malfeasance or corruption should be caught by the lower peons like a CEO or COO who make handsomley. Everybody knows that board memebers are just a token piece of horse crap. They are a token. Get it? They get a huge chunk of cash but do nothin. Get it?

Board of directors are worthless, have no clue, if they were gone nobody would notice type of people. Forget em.

BigAl 4 years, 1 month ago

"The settlement came to the media’s attention Friday when the Kansas Corporation Commission chief sent out a news release promising that Westar customers wouldn’t pay any of the compensation or legal expenses awarded in the deal" WHAT??

As far as I know, their only source of income is from Westar customers. Where else are they going to get the money? You can bet Westar will be coming back to the customers for a rate hike very, very soon.

Sad day for Kansas consumers.

hyperspaced 4 years, 1 month ago

I believe that the KCC Chief was trying to point out that these settlements will be charged "below the line" and therefore will be funded by the stockholders rather than the ratepayers. In the regulatory accounting world there is a line in the sand. Everything above the line is paid for by the ratepayers and everything below the line is paid for by the stockholders.

Sigmund 4 years, 1 month ago

merrill (anonymous) says… "How is it ratepayers won't pay for the golden parachute going to a white collar crook?"

Are you this mind numbed? What part of "the U.S. Circuit Court of Appeals threw out the convictions" and "prosecutors dropped the case," did you not understand? As for who is going to pay it will come out of the stockholders pockets and if that isn't enough (it is, but if it wasn't) from the bond holders.

just_another_bozo_on_this_bus 4 years, 1 month ago

Actually, it was a Supreme Court ruling on the crooks that ran Enron that killed the case against Lake and Wittig. The ruling essentially said that it's perfectly OK for executives to rip off their companies and stockholders as long as it doesn't involve bribes or kickbacks.

In other words, their was no exoneration of either of them, merely the seal of approval on corporate corruption by the Supreme Court.

http://cjonline.com/news/local/2010-08-19/lake_wittig_case_dismissed

Sigmund 4 years, 1 month ago

According to Google finance there are 113,690,000 shares of Westar outstanding. Westar pays it shareholders around $140,975,600 a year in dividends (about a $1.24/share/year). 74% of those shares are owned by institutions (pension plans, mutual funds, insurance companies) and the rest are individuals, all who decided not to spend the money they earned by their labor, but instead invested in Westar (and other utilities). So for bozo, merrill and the other class warfare types this should be a very good day indeed as it is the saver class once again gets to pick up the tab.

just_another_bozo_on_this_bus 4 years, 1 month ago

What it is is just more proof of how corrupt corporate culture is, and another indication of how boards of directors, CEO's, COO's, CFO's, etc, run roughshod over stockholders and the public in general.

Sigmund 4 years, 1 month ago

just_another_bozo_on_this_bus (anonymous) replies… "just_another_bozo_on_this_bus (anonymous) replies…"The ruling essentially said that it's perfectly OK for executives to rip off their companies and stockholders as long as it doesn't involve bribes or kickbacks."

No, what the ruling said was the government was wrong to charge Wittig and Lake with a statute meant to prosecute bribes and kickbacks when you can't prove bribes and kickbacks. As they violated no other statute they are entitled to the compensation. If you have a beef with Wittig's and Lake's compensation I suggest you take it up with the Board of Director's.

But it is nice that you are all worked up protecting the wealthy investor class that will be paying the bill. I am sure those fat cats will appreciate it. You're such a tool.

just_another_bozo_on_this_bus 4 years, 1 month ago

That's pretty much what I already said-- the dropping of the charges wasn't an exoneration of either of them. It merely said that their brand of corruption couldn't be prosecuted since it didn't involve bribes and kickbacks.

And, yes, it is appropriate that the investors pick up the tab on this. Too bad stockholders will likely continue to remain uninvolved in what the companies they invest in do. The incestuous world of corporate BOD's, CEO's, COO's, CFO's, et al, will do all they can to make sure it remains that way.

Sigmund 4 years, 1 month ago

just_another_bozo_on_this_bus (anonymous) replies… "It merely said that their brand of corruption couldn't be prosecuted since it didn't involve bribes and kickback."

Wittig faced 3 trials. In the first trial there were 39 criminal charges, hung jury. In the second trial Wittig was convicted of 40 counts, which was overturned by the 10th U.S. Circuit Court of Appeals (three judge panel, unanimous, 3-0) because any further trial on the conspiracy charges was barred by the Fifth Amendment's Double Jeopardy Clause, a "technicality". The prosecution then brought a third trial which was dropped after the Supreme's voted 6-3 in Enron, a opinion written by that corporate tool Justice Ruth Bader Ginsburg.

If Wittig and Lake were guilty then the prosecution, including former Douglas County DA Christine Kenney was incompetent and 9 different justices were either incompetent or corrupt. In the alternative they were not guilty and owed the unpaid compensation which will be paid by the owners of the company.

Sigmund 4 years, 1 month ago

just_another_bozo_on_this_bus (anonymous) replies… "That's pretty much what I already said-- the dropping of the charges wasn't an exoneration of either of them. It merely said that their brand of corruption couldn't be prosecuted since it didn't involve bribes and kickbacks."

Not true. There are tons of laws they could have been charged and convicted of if there were any evidence they had violated any of them. You can't charge bribery and kickbacks if there is insufficient evidence to prove bribery and kickbacks and expect a conviction to stand legal scrutiny. Bribery and kickbacks are not the only possible corporate crimes. What other crimes do you think Wittig and Lake committed and what evidence is there that the U.S. Attorney's Office missed?

just_another_bozo_on_this_bus 4 years, 1 month ago

Perhaps the US Attorney's office dropped the ball. Or perhaps corporate corruption is just SOP. Either way, Wittig and Lake are little more con men, a craft they learned well while on Wall Street.

Sigmund 4 years, 1 month ago

just_another_bozo_on_this_bus (anonymous) replies… "Perhaps the US Attorney's office dropped the ball. Or perhaps corporate corruption is just SOP. Either way, Wittig and Lake are little more con men, a craft they learned well while on Wall Street."

I have never seen you so upset that wealthy fat cat investor capitalist are going to have to pay a con man $21,000,000, but it is refreshing and shows, contrary to popular opinion, just how opened minded and fair you are. Be sure to forward any evidence you have of that widespread SOP corporate corruption to the U.S. Attorney's Office, I am sure the current administration will jump right on that.

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