We share Westar’s pain.
Westar Energy has repeatedly said that none of its financial dealings with former CEO David Wittig and his cronies will impact the company’s utility customers. Nonetheless, we can only imagine the company’s pain at having to pay huge salary benefits and legal fees to the men who escaped conviction on charges related to looting millions of dollars from the state’s largest utility.
On Friday, it was announced that Westar had reached a settlement to pay former top strategy officer Douglas Lake $21 million in unpaid compensation and $5.3 million for attorney fees. The company still is in arbitration concerning a similar payment to Wittig.
What a bitter end to this Westar chapter. Lake and Wittig were forced out of their jobs in 2002 and indicted by a federal grand jury in 2003 for conspiring to inflate their compensation at Westar, along with wire fraud and money laundering. The first trial ended in a hung jury and their convictions in a second trial were thrown out by the U.S. Circuit Court of Appeals, which said prosecutors didn’t adequately prove the charges. The two were awaiting a third trial when federal prosecutors decided last August to drop the case.
So, despite the fact that Westar stock plummeted from about $44 per share to less that $9 per share and its debt grew to more than $3 billion under the leadership of Wittig and Lake, it’s now come down to how much Westar owes Wittig and Lake rather than the other way around. During the trial, prosecutors showed that while Westar was laying off hundreds of employees, Wittig spent more than $6.5 million to renovate the company’s executive suites, including $29,000 for a custom-built television wall unit. At the same time, Wittig was spending millions of dollars to renovate his own home grand style.
The news of Lake’s settlement came to light Friday when the Kansas Corporation Commission sent out a news release promising that Westar customers wouldn’t pay any of the compensation or legal expenses called for in Lake’s settlement. That amount will be paid entirely by Westar shareholders, according to the KCC.
Westar officials have continued to assure their customers of that fact throughout the Wittig scandal. It’s difficult to imagine how the damage done to Westar won’t trickle down in some way to its customers, but those of us paying our monthly bills have little choice but to take state regulators and company officials at their word.
Even if it doesn’t affect our personal pocketbooks, this case certainly leaves a sour taste in all of our mouths. The idea of the former Westar executives now claiming tens of millions of dollars in restitution is the ultimate insult.