Mr. SANGER. We told the TVA Board that Mr. Bibb through MAC could be retained as a manager at TVA's Browns Ferry Nuclear Plant. The big crucial difference is, if the chairman pleaseand it sometimes amazes me, it seems that people deliberately want to confuse things-but that contract with Bibb and MAC does not give Bibb or MAC any authority to employ anyone else. That is the difference. Mr. SIKORSKI. This I failed to mention. Mr. White wanted a contract, an $8 million, 2-year service contract with Stone & Webster. Mr. SANGER. It was $4 million for each year involving the original contract for 2 years, and then there was another $10 million contract. Mr. MASON. And the plot thickens, too. He also wanted to be able to hire this corporation of his own called "Staymar" or "Stemar," or has employed them, with his wife as one of the principals. Mr. SANGER. He employs other people through Stemar, and for that employment his contract permits him to get up to 10 percent of each employee's salary. As I understand it, he says he only collects up to 2 percent or something, but the contract provides for 10 percent. I think that is a matter of business judgment, if the chairman pleases. I don't condemn that insofar as a straight contract. Mr. SIKORSKI. Let me read section 208 of 18 U.S.C.: Except as permitted by subsection (b), the waiver subsection, whoever being an officer or an employee of the executive branch of the United States Government or any independent agency of the United States-which certainly would include the Tennessee Valley Authority, wouldn't it? Mr. MASON. Yes. Mr. SIKORSKI [continuing]. Participates personally and substantially as a government officer or employee through decision, approval, disapproval, recommendation, the rendering of advice, investigation, or otherwise, in a judicial or other proceeding, the application, request for ruling, or other particular matter in which to his knowledge he, his spouse, minor child, partner, or organization in which he is serving as an officer, director, trustee, partner, employee, or any person or organization with whom he is negotiating or has any arrangement concerning prospective employment, has a financial interest, shall be fined not more than-then the penalties. The waiver provision is triggered if there is disclosure; when an employee advises the government official responsible for appointment to his position of the nature and circumstances of the arrangement and makes full disclosure of the interest and receives in advance a written determination by such official that the interest is not so substantial so as to be deemed likely to affect the integrity of the services which the government may expect from such officer or employee. Now you submitted a written memo on conflict of interest on February 13th to the Board members; to Mr. Willis, the general manager; and to TVA's Inspector General, Norman Zigrossi; correct? Mr. SANGER. That is correct. Mr. SIKORSKI. And after receiving this memo, one of the Board members, Richard Freeman, resigned? Mr. SANGER. That is correct. Mr. SIKORSKI. Why? Mr. SANGER. I don't want to speak for Mr. Freeman. Mr. SIKORSKI. We are told that he resigned because he did not want to be associated with the conflict of interest. Mr. SANGER. That is what has been reported in the―― Mr. SIKORSKI. Well, certainly the chronology supports that. Mr. SANGER. I think that the timing is evident. Mr. SIKORSKI. What was this so-called Inspector General's response to your memo? Mr. SANGER. Well, under the regulations issued under the Ethics in Government Act, the regulations provide for the ethics officer to utilize an IG in carrying out your ethics functions. And the IG for TVA, after he came onboard, had the responsibility for reporting any sorts of criminal allegations or violations to the U.S. Attorney. So following the ethics regulations, I sent the IG a copy of my February 13 memo. I received it back on March the 10th with a note that says: Herb: As a result of all the interest in this matter I am returning my copy of the attached memo for safekeeping. I believe it was sent to me for information purposes. On that note Mr. SIKORSKI. He said what? Mr. SANGER. "I believe it was sent to me for information purposes." He said two things. He says: As a result of all the interest in this matter I am returning your memo for safekeeping. I believe it was sent to me for information purposes. My handwritten note on that Form 45 says: "I discussed this conflicts issue in some detail with Zigrossi on March 31, 1986." He said he sent this memo back to me because this was a controversial matter in which he was not yet involved. Mr. SIKORSKI. Without objection, that will be part of the record. Is that attached to your summary statement? Mr. SANGER. NO. Mr. SIKORSKI. Without objection, that will be part of the record here. [The memo follows:] matter, I am returning my copy of the attached I discussed this confluls issul in some detail with Zigrosse on March 31, 1986. He said he sent this meme back to Лие because this was a controversial matter in which he was not yet involved IVA 410 (05-1-44) INTEROFFICE MAILING TVA 64 JOS-9-65) (OP-WP-5-85) UNITED STATES GOVERNMENT Memorandum ΤΟ ADMINISTRATIVELY CONFIDENTIAL TENNESSEE VALLEY AUTHORITY : General Counsel's Files, E9B15 C-K FROM : Herbert S. Sanger, Jr., General Counsel, E11833 C-K : DATE SUBJECT: SERVICES FOR CONTRACTOR EMPLOYEES IN LINE MANAGEMENT Steven A. White (White), Manager of Nuclear Power, 1 That statute provides: "(a) Except as permitted by subsection (b) hereof, whoever, being an officer or employee of the executive branch of the United States Government, of any independent agency of the United States. . . including a special Government employee, participates personally and substantially as a Government officer or employee, through decision, approval, disapproval, recommendation, the rendering of advice, investigation, or otherwise, in a judicial or other proceeding, application, request for ruling or other determination, contract, claim, controversy, charge, accusation, arrest, or other particular matter in which, to his knowledge, he, his spouse, minor child, partner, organization in which he is serving an officer, director, trustee, partner or employee, or any person or organization with whom he is negotiating or has any arrangement concerning prospective employment, has a financial interest- "Shall be fined not more than $10,000, or imprisoned not more than two years, or both. (b) Subsection (a) hereof shall not apply (1) if the officer or employee first advises the Government official General Counsel's Files February 13, 1986 SERVICES FOR CONTRACTOR EMPLOYEES IN LINE MANAGEMENT White then left Mason with Kelly and Bill Wegner (Wegner), a Beta employee supplied through SWEC. Wegner explained in some more detail Kelly's relationship to SWEC and Kelly described his variable compensation arrangement with SWEC, including that his bonus and stock bonus were essentially discretionary with SWEC. Kelly said he would not be giving up the authority of his SWEC QA manager job (although he would delegate responsibility to SWEC subordinates) and he would continue to serve on the SWEC Board of Directors. In answer to Mason's questions, both Wegner and Kelly explained that Kelly would have TVA authority to order engineering services from SWEC. Wegner said that the TVA Board had a few minutes earlier approved White's selection of Kelly and that wegner needed to release that announcement for publication. He was insistent that it be announced immediately. Mason told Wegner and Kelly that Kelly's interests as a SWEC officer, director, employee, and stockholder and his anticipated TVA authority to order from SWEC created a situation covered by 18 U.S.C. § 208 that Mason could not approve and that he did not believe the Board had waived when it approved White's selection of Kelly. Mason adjourned the meeting saying he would have to consult with the General Counsel. Wegner urged that it be done quickly. Herbert S. Sanger, Jr. (Sanger) was out of the office on other business matters and not immediately available. Mason did reach W. F. Willis (Willis). Willis said, he bad not known Kelly was a SWFC Airector and that he had not raised any conflict issue with the Board members when they each approved Kelly and that the members had made no conflict of interest determination. Wegner convened another meeting attended by him; Kelly; Mason; Willis Matson (Matson), a SWEC sales person; and Ed. Siskin (Siskin), a SWEC vice president who came to work at 1 [cont.] responsible for appointment to his position of the nature and circumstances of the judicial or other proceeding, application, request for a ruling or other determination, contract, claim, controversy, charge, accusation, arrest, or other particular matter and makes full disclosure of the financial interest and receives in advance a written determination made by such official that the interest is not so substantial as to be deemed likely to affect the integrity of the services which the Government may expect from such officer or employee . . |