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that the General Manager then arrange to fill them.
However, white said this was
an impossible management
arrangement that was unacceptable to him.
The TVA Board, on January
3, despite Mason's advice, approved the proposed contractual
arrangements and an 18 U.S.C. § 208(b) determination of
insubstantiality for White.
I had been away from the office from December 26, 1985, until
January 6, 1986.
Mason had telephoned me several times, and I had
indicated my agreement with his views. I returned to the office on January 6, met with the Board members and Willis, and told them on
several occasions during January that the Section 208(b)
determination for White was doubtful, at the very least, because his
interests in SWEC and STEMAR could be considered to be substantial.
I had considerable discussions with the Board members, Willis, and
white during the remainder of January, and the issue came to a head
once again early the next month.
It developed at that time that
White wanted to engage four SWEC employees--including Richard Kelly,
an officer, employee, and director of SWEC and a substantial stockholder of SWEC's parent company, Stone & Webster, Inc.--who
would also be authorized to order personnel and services for TVA
Mason and I advised the Board that, in our opinion, such
arrangements would violate Section 208, and that a waiver under
Section 208(b) could not be legally justified. When Dean asked me hypothetically if I would vote for the waivers if I were on the Board, I emphatically answered "No" on two different occasions.
There was no misunderstanding of our views of the egregiousness of this pyramiding of additional layers of contract managers with conflicts on top of the arrangement the Board approved on January
Mason and I recorded the events and advice we gave during this
period in a memorandum to the General Counsel's files dated February
13, 1986, copies of which were given or sent to the Board members,
Willis, and TVA's Inspector General, Norman Zigrossi (Zigrossi) (OGE
also has a copy), and in a detailed chronology that we gave to
One of the three Board members, Richard M. Freeman,
resigned on February 13. The other two Board members approved a Section 208(b) insubstantiality determination for the four SWEC
Over the next few months, the Section 208 problem was mentioned
repeatedly in informal conversations between the Board members and me including, beginning in late February, my suggestion that the insubstantiality determinations had existed so long without
correction that someone might suggest that the Board members were acting as aiders, abettors, or accessories to criminal violations of
The discussions with the Board often occasioned angry retorts from
the members. For example, Director John B. Waters (Waters) told me in a heated manner that Mason's and my February 13 files memorandum was not as good as our work usually was (a disinterested reader can
make his or her own judgment about the quality of what was intended to be a record of events) and that it caused Waters to have the
worst weekend of his life.
As I tried to suggest solutions to the
conflicts problem, Waters said to me repeatedly. "White won't agree
to change the contracts," or "white won't like that suggestion."
white told me that he wanted some lawyer other than Mason to work
with him on preparing additional loaned manager agreements and asked
that I assign my deputy, Lewis E. Wallace (Wallace), to do so. He said, "when Mason comes in the room, the whole atmosphere changes."
During this period, Representative Schroeder of Colorado raised with TVA various questions she had as to TVA's authority to enter into a contract with SWEC and STEMAR for management services for its
nuclear plants and into the employment arrangements for Zigrossi,
especially with regard to the compensation to be paid.
referred a number of such questions to the General Accounting Office
On March 21, GAO sent TVA a letter asking for its views on
On April 1, Board Chairman Dean sent me a
memorandum (Ex. 2) asking that I prepare a legal opinion for the
Board on these questions, which I did.
The same April 1 memorandum
from Chairman Dean included a final paragraph reading:
In addition to the above request, I would like your written
Mason and I were dumbfounded by this language since we had pointed out repeatedly, beginning on January 2, that Section 208 was criminal statute which provided criminal penalties for anyone convicted of violating it. Our February 13 files memorandum, of
which the Board members received copies as previously noted, quoted
the statute in full (pp. 1-2, n.l) and contained (at p. 11) a
In our opinion, the financial disclosure requirements of the Ethics in Government Act of 1978 and the conflict of interest statute 18 U.S.C. S 208 apply to White, Kelly, and others similarly situated, and noncompliance with those laws would be a blatant disregard of them.
I assumed, however, that the Board might be having second thoughts
about its February 13 Section 208(b) determinations, about which we had so often warned them, and might want a more formal and
definitive memorandum as a basis for changing or modifying its
Mason and I, taking into account the similar views
and comments of some other lawyers in the office, prepared and sent
to Dean the May 5 memorandum as to which OGE is, of course, fully
Actions of the TVA Board following and with
respect to the May 5 memorandum.
Following my May 5 memorandum, it quickly became apparent that my assumption as to the Board's possible use of it as a basis for
changing its position as to the Section 208(b) waivers was
incorrect, and that the effort to isolate Mason from any substantive
work in ethics and his other areas of work responsibility were to be continued and extended to me relating to my duties as General Counsel and DAEO. Thus, even though Dean had requested our May 5
memorandum, the Board greeted it with hostility (as it had earlier
greeted the February 13 files memorandum) and with an apparent determination to avoid, if possible, giving effect to the
conclusions set out in its final paragraph.
This attitude continued
even after the Board received the strongest possible affirmation of
our May 5 opinion from the independent counsel it employed, without
my prior knowledge, to advise it on the 18 U.S.C. § 208 problem;
after it received telephone calls from Senators Sasser and Gore
about the problem (see discussion below); and after oge in its
June 23 letter to Dean had expressed its full agreement with our
May 5 memorandum and urged the Board to cooperate with me as DAEO.
The Board indicated to me its displeasure not only with what the
May 5 memorandum said, but with my having sent a copy of it to
Before sending OGE a copy, I had told the Board that I was
going to do so because the governing regulation required it. view of the Board's continuing expressions of displeasure on this point, I reminded them that on September 29, 1980, the Board itself had adopted a resolution (Ex. 3, pp. 26-27) which appointed me TVA'S
DAEO under the Ethics in Government Act of 1978 and TVA's ethics
counselor under Executive Order No. 11, 222, and which made me
"responsible for assuring TVA's compliance with that act and Executive order and the regulations promulgated thereunder." I also again pointed out to them that one of those regulations, codified in 5 C.F.R. S 738.313, requires that every designated agency ethics