Page images
PDF
EPUB

to be applied to salary and years of service might be increased for those who had

retirement ages of less than 60 years.

It was some time late in January or early

February, 1986 that I had a clear understanding of what the changes were likely

going to be in the retirement system rules.

It was during the same period of time

that I asked the Retirement Branch to give me information on what my retirement

benefits would be under some alternative cases such as; how long I would have to

work to be eligible to retire; what my benefits would be 1f I resigned with an

effective date after the proposed rules were in effect; and, etc. That information

1 was supplied to me and was used in my decision process about my future career.

The changes in the retirement system rules were approved by the TVA Board

in mid-February, 1986 with an effective date of April 1, 1986.

On March 13, 1986, I submitted my resignation letter to Mr. Willis.

That

letter offered my resignation with an effective date of April 4, 1986.

In his letter

to me dated March 18, 1986, Mr. Willis accepted my resignation as tendered.

[blocks in formation]

Subscribed in my presence and sworn to before ne this 22 day of

August

[merged small][ocr errors][merged small][merged small]

OCTOBER 7, 1986 SUPPLEMENT TO THE
SEPTEMBER 4, 1986 STATEMENT OF

HERBERT S. SANGER, JR., ON
EVENTS LEADING TO HIS FORCED RESIGNATION
FROM THE TENNESSEE VALLEY AUTHORITY (TVA)

The TVA Board's initial refusal of my offer to resign and its sub

sequent request and actions forcing me to resign are connected by

many facts to its employment of Joseph C. Swidler (Swidler) at the

instance of Stone & Webster Engineering Corporation and Steven Afd

White (White).

Swidler failed in his early attempt to get an agreement from the

Office of Government Ethics (OGE) that a Federal criminal conflict

of interest statute should be ignored because of the enormity of

the total shutdown status of TVA's nuclear plants.

He thus fail

ed to extricate the TVA Board from its even-then long-existing

defiance of OGE's condemnation of the Board's involvement in the

continuing violation of the Federal criminal conflict of interest statute or as the press attributes to Senators Sasser and Gore, "for acting indecisively in handling the conflict-of-interest issue surrounding the hiring of outside consultants". The Knox

ville News-Sentinel, October 5, 1986, p. l.

Indeed, Swidler exacerbated the TVA Board's defiance to such an

extent that OGE issued a letter concluding that Swidler's advice

was "adverse to that of the TVA Board" and had thereby deprived the TVA Board of access to me and members of my staff for legal.

advice.

The second and third reasons are contrivances on their faces.

А

highly respected Washington, D. C. law firm, McCarthy, Sweeney & Harkaway, P.C., has advised the Retirement Board that it has a

"duty" to reject Zigrossi's assertion of authority over the Retirement System. Ex. 3. Swidler's contrary opinion, Ex. 4,

is fully expected since it serves to support his August 18 spur

of-the-moment opinion that prior positions can always be "distin

quished" which he gave when confronted with his inconsistent prior

opinion;

it also follows through on his previous bad judgment in

advising the TVA Board that I could be placed on leave because I

exercised my discretion as a Retirement System Board member in a

way that did not meet the wishes of the TVA Board.

The law is

clear that regardless of who appoints a director of a retirement board, the director is not subject to the will of the one who

made the appointment.

Swidler was just wrong in advising the Board otherwise.

He was

right 38 years ago when, as a director of the Retirement System

and TVA's General Counsel, he advised TVA and took the position

with the General Accounting Office (GAO), that is the opposite

of that which he states in his September 24, 1986 opinion.

That

opinion incidentally was a replacement of his earlier opinion

issued the same day which he and TVA leaked to the press and

which was reported nationally.

(Their distribution of the earlier

opinion constituted one of their violations of the Federal Privacy Act in the effort to castigate me for Retirement System matters to cover up their reaction to the criminal conflict of interest advice

I gave them in acting as TVA's General Counsel and Designated

Agency Ethics Official.)

1.

The Swidler memorandum, corrected to eliminate a further pri

vacy Act violation, is remarkable for--among other things--its failure to discuss or even quote the two documents most relevant to the nature of the TVA/Retirement System relationship--i.e., TVA Board Chairman Clapp's December 7, 1948 letter to the Comp

troller General an

Swidler's August 5, 1949 letter to the same

officer. As pointed out in the McCarthy, Sweeney & Harkaway, P. C., memorandum, these two letters represent contemporaneous construc

tions of the Retirement System Rules and Regulations by those in

volved in their original promulgation and as such are to all intents and purposes dispositive on the points they cover. Swidler's careful avoidance of them is especially remarkable since both of

them are Swidler's own products.

The Clapp letter was prepared

for him in what was then TVA's Division of Law headed by Swidler

as General Counsel, and Swidler himself approved it; it is thus as

much his letter as Clapp's.

The August 5, 1949 letter Swidler

of course signed as Chairman of the Retirement System Board.

[blocks in formation]

by GAO to audit the Retirement System in 1948 on the basis that

it "involved the extension of authority by an outside agency,

not the rights, duties and responsibilities of TVA itself."

In

fact, the December 7, 1948 letter expressly equated GAO's and TVA's

own authority as regards the System, saying:

If TVA should now say that the Retirement funds consti-
tute TVA funds and should assert the right to control
and audit the Retirement System's transactions, the
value of the System in the eyes of the membership
would be greatly impaired, and might be entirely lost.
Such action would be a breach of faith and trust on the
part of TVA. The audit of the Retirement System's
accounts by the General Accounting Office on the assump-
tion that they constitute financial transactions of
TVA must be viewed as no less a blow to the integrity
of the System than if the proposal were made directly
by TVA (emphasis added).

b.

The Swidler memorandum attempts a further "distinction"

by saying that the GAO was attempting "not merely to investigate

the Retirement System, but to assert control over its day-to

day transactions", while "TVA is not asserting the right to exer

« PreviousContinue »