Ending months of investigations into its nonregulated operations, NUI Energy Brokers Inc. (NUIEB) agreed to pay a $500,000 fine last week to the state of New Jersey. The wholesale trading subsidiary of Bedminster, NJ-based NUI Corp. pleaded guilty to misconduct by a corporate official for siphoning funds away from NUI’s utility subsidiaries as part of a gas purchasing program.

In a separate agreement with the state last Wednesday, NUI Corp., the parent company, agreed to fund and operate certain community service programs because of the misconduct.

According to the attorney general’s criminal action, “Officers, employees and agents of NUIEB engaged in transactions involving the purchase or sale of gas on behalf of regulated utility companies sometimes referred to as ‘sleeving,’ by which NUIEB illegally transferred to itself profits that properly belonged to the utility companies and thereby derived a benefit of more than $74,500…”

The plea agreement bars several NUIEB employees, including Brian Rose, James Puzio, Joseph Bores, Christine Fressa, Stanley Brownell and Joseph Principato from having any role in gas trading on behalf of the company for three years and bars the company and its affiliates from hiring or rehiring them as employees or consultants.

The plea agreement with the state follows a settlement with New Jersey regulators earlier this year, following a focused audit of its operations that found a broad range of corporate management failures and inadequate financial insulation of the utility operations from NUI’s poorly performing nonutility businesses (see NGI, April 19).

In April, the company reached the settlement with the New Jersey Board of Public Utilities and agreed to refund $28 million to Elizabethtown Gas customers and pay a $2 million penalty to the state of New Jersey. It also agreed to refund its Florida utility customers $2.6 million.

“When I joined the company, the NUI board made it clear that we were to conclude the various investigations into the company and proceed with the sale process,” said CEO Craig Matthews on Wednesday. Matthews was brought onboard from KeySpan in January to direct the sale of the company (see NGI, Feb. 2). The investigations, financial trouble and a market downturn last year forced the company put itself on the auction block last fall. CEO John Kean Jr. resigned in September 2003 and the NUI board concluded that a sale was in the best interests of shareholders (see NGI, Sept. 29).

“These agreements with the New Jersey state attorney general and the settlement with the New Jersey Board of Public Utilities brings closure to the investigations by these parties of the company’s energy trading business,” Matthews said. “The completion of these investigations should help facilitate the sale of the company.” NUI expects to sign a definitive agreement with a purchaser of the company in the third quarter of calendar 2004.

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