Record tracks Renkes moves

Probe of coal deal headed for governor's desk

Posted: Monday, January 24, 2005

ANCHORAGE - Documents released by Gov. Frank Murkowski's office shed more light on the connections between Alaska Attorney General Gregg Renkes and personal business ties involving a proposed state coal deal with Taiwan, the Anchorage Daily News reported Sunday.

Renkes is under investigation for possible ethics violations as a result of his efforts to advance the coal project and because of his stock ownership in KFx Inc., a Denver company trying to commercialize a coal-drying process.

In response to a public records request from the Daily News, the governor's office released scores of documents, including including draft letters, talking points, a business development plan, and official and personal e-mails.

Neither Renkes nor Murkowski would comment on the documents, with the governor saying he's reserving judgment until after an outside counsel he hired turns in his report. Robert Bundy, a former U.S. attorney investigating Renkes, said his report may hit the governor's desk today following a four-month investigation.

The released documents concern a period when the state was trying to land a commitment from Taiwanese companies to buy coal from Alaska's dormant Beluga field, across Cook Inlet from Anchorage.

On Feb. 19, 2004, Renkes sent a letter to Taiwan's deputy minister of economic affairs, Steve Chen, inviting a delegation of Taiwanese coal buyers to Alaska. The letter talked about the potential of a coal-drying technology, K-Fuel, that could turn Beluga's wet coal into a marketable fuel. The letter was crafted by David Fu, an investor in the project. Fu is managing director of Kanturk Partners, a business partnership based in Washington, D.C.

Fu drafted several versions of the letter for Renkes, according to Renkes' e-mails. The attorney general sent the letter to Chen virtually verbatim.

A delegation from two Taiwanese utilities, Tai Power and China Steel, visited Alaska last March. But the executives later expressed reservations about whether the K-Fuel process worked.

In April, Fu wrote to Renkes again, complaining about how the Taiwanese coal buyers were hesitant about making a commitment to buy Alaska coal processed with K-Fuel.

"We need to remove any excuses that they can use to delay or not do this," Fu wrote.

Fu wanted Renkes' advice about sending a business associate, Carl Ford, to Taiwan to talk to officials there about K-Fuel and the Alaska coal project. Ford, an ex-CIA agent, works for Cassidy & Associates, a Washington lobbying firm that has worked for Taiwanese clients. The firm's chairman, Gerald Cassidy, is a principal of Kanturk Partners and an investor in KFx, which developed K-Fuel.

On April 22, Ford wrote to Fu saying he was preparing to fly to Taiwan and wanted to deliver this message:

"Governor Murkowski and Attorney General Gregg Renkes asked that I bring you an update on their thinking about Taiwan's future use of Alaska coal resources. We have prepared a draft road map of next steps for the project."

That same day, Fu e-mailed Renkes:

"Gregg, can we get your guidance on this? Carl would like to schedule his visit to Taiwan asap. Thanks."

On April 27, Renkes e-mailed Taiwan's Chen, asking if he would receive Ford.

"I would make this trip myself but I am not able to travel to Taiwan at this time because our legislature is in session," Renkes wrote. "I will travel to Taiwan in June if it will be helpful in making progress on the coal project."

Chen agreed to meet with Ford, who traveled to Taiwan a few days later. By May 5, Ford sent a report back to Fu saying the trip had produced positive results. Ford said that Taiwan's president wanted to move forward with the Alaska coal project and that his personal relationship with Murkowski "is the critical factor in his thinking about the project."

Ford asked Fu if Murkowski could send a letter summarizing the key ideas behind the coal development. Fu wrote to John Venners, another Kanturk principal who is also a lobbyist for KFx Inc. and a former business partner of Renkes:

"Cannot be better news, please read. John, can we get on the phone with Renkes and move this forward?"

On May 7, Renkes wrote to Fu saying he had received a draft letter Fu had written for Murkowski.

"I have rewritten your draft a little (it was very good) and planned on discussing it with the Governor (and sending it) tomorrow," Renkes wrote.

The three-page letter Murkowski sent, dated May 7, talked about the benefits of K-Fuel. The letter contained key concepts laid out in Kanturk's business plan and earlier letters written by Fu.

In October, Renkes said he had disclosed a potential conflict of interest to the director of the Office of International Trade and that he "drew a line that I could not and did not go beyond."

Renkes, who accumulated stock in KFx in the months leading up to the September signing of an Alaska-Taiwan coal agreement, said he believes the investigation of his activities "will remove any lingering doubts about my actions in my capacity as attorney general."

During his negotiations with Taiwan, Renkes' largest financial asset was his KFx stock, worth more than $100,000. KFx also was his most actively traded stock between October 2003 and October 2004.

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