The General Accounting Office (GAO) has cleared former FERC Chairman Curt Hebert Jr. and Enron Corp. Chairman Kenneth Lay of any criminal charges and ethics violations stemming from a telephone conversation between the two men last February during which Hebert claimed Lay sought a change in his position on a key Commission policy issue in exchange for agreeing to endorse Hebert to continue on as chairman.
“We found no evidence that applicable federal statutes or ethics regulations were violated. There is no evidence that the chairman [in seeking Lay’s endorsement] attempted to use his public office for private gain, acted other than impartially, or offered preferential treatment to Mr. Lay and Enron. Likewise, there is no evidence that Mr. Lay offered a thing of value [his endorsement] to Mr. Hebert” in return for obtaining greater access to the electricity grid for companies like Enron, the GAO said in a letter to Sen. Joseph Lieberman (D-CT), chairman of the Senate Governmental Affairs Committee.
Hebert was forced to step down as FERC chairman in late August when President Bush appointed close friend and former Texas regulator Pat Wood III to head up the Commission. Prior to that, it had been widely known that Hebert had tried to shore up support to stay on as chairman amid mounting news reports that the president was looking to name Wood to replace him. Lay’s support of Hebert was seen as critical, given his stature in the energy industry and his close ties to Bush.
Lieberman asked the GAO to undertake an investigation after the The New York Times last May reported on the telephone call between Hebert and Lay (See NGI, June 4). Although the GAO exonerated the two men, Lieberman and Sen. Dianne Feinstein (D-CA) said last week they still had concerns about the exchange that took place. “…[T]he fact remains that GAO confirmed that the chairman of a federal regulatory commission discussed support for his continued appointment as chairman with the senior official of a major energy company regulated by the commission. We believe that such behavior undermines the public’s confidence in federal regulators in general and in the Federal Energy Regulatory Commission in particular.”
In a Sept. 17 letter, the two senators called on Wood to conduct a review of the agency’s ethics and record-keeping regulations and procedures. FERC has scheduled a forum on ethics’ issues at 10 a.m. on Oct. 17 at its headquarters in Washington D.C.
During the probe, the GAO said both men agreed that a telephone conversation occurred in February 2001, that Lay asked Hebert about his views on what FERC’s policy should be on access to the electricity grid, and that they did not discuss any details of pending cases before the Commission involving Enron.
But Hebert and Lay differed in their interpretations of the telephone call, according to GAO. “Mr. Hebert believes that Mr. Lay was attempting to tie his support for [Hebert] continuing as chairman to a change in [Hebert’s] position on this [access] policy issue.” But Lay denied there was any quid pro quo involved. Lay contends that since Hebert “was pressing him for an endorsement,” he simply “took the opportunity to ask him [Hebert] about his position on access, an issue that he and Mr. Hebert did not agree on.”
The GAO cleared Hebert and Lay of violating: 1) a federal bribery statute, which makes it a crime to “give, offer or promise” anything of value to a public official with the “intent to influence any official act;” 2) a federal law that makes it a crime for any public official to “demand, seek, receive, accept or agree to receive” anything of value in exchange for being “influenced in performing any official act;” and 3) a federal statute that makes it a crime to “solicit or receive any money or thing of value” in an attempt to obtain public office.
“Regardless of who initiated the discussion concerning open access, it does not appear that any of the criminal statutes…were violated,” said the GAO. “All three statutes require that money or a ‘thing of value’ be offered or solicited in return for something else,” it noted. “Although the courts interpret the term ‘thing of value’ broadly to include both tangibles and intangibles, our review of case law found no support for the proposition that mere political support may be considered a thing of value for purposes of the relevant criminal statutes.”
Moreover, “the offer of a thing of value must be tied to an expectation of a corresponding action by the other party. That is, there must be an expected quid pro quo…Here, there is no evidence that such an exchange was contemplated,” the GAO concluded.
Nor, the agency said, did Hebert violate federal government ethics regulations, which bar employees from soliciting or accepting any gift or items of monetary value from a person or entity seeking to influence official action. Lastly, it concluded that the telephone conversation between Hebert and Lay did not breach FERC regulations banning off-the-record communications that could affect the outcome or influence a decision in an on-the-record proceeding.
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