Ethics probe clears Renkes, governor says

Murkowski calls for halt to second ethics query by personnel board

Posted: Wednesday, January 26, 2005

Alaska Attorney General Gregg Renkes did not violate the state's ethics code in his financial dealings, though he violated state procedure by negotiating a state coal deal without first seeking an ethics review of his personal ties, a governor-appointed investigator said Tuesday.

Gov. Murkowski said a 64-page report by former U.S. Attorney Robert Bundy, released Tuesday, cleared Renkes of any illegal action through his ownership of stock in KFx, a Denver company with a major financial interest in Alaska's effort to market its Beluga field coal to Taiwan.

Bundy wrote that Renkes' shares in KFx never represented more than .02 percent of the company's outstanding shares and therefore did not present an ethical conflict.

The finding, which notes that state ethics law does not specify a limit to government officials' holdings in companies that they affect, left some Democrats demanding legislation.

"We absolutely have to change the ethics code," said Rep. Beth Kerttula, D-Juneau. "If there is a bright line, this situation won't happen again."

Murkowski called for an end to a separate ethics inquiry on the matter by the state's personnel board, initiated by Rep. Eric Croft, D-Spenard, and former Republican Wasilla Mayor Sarah Palin.

Croft said the personnel board investigation must continue.

Renkes was intimately involved in coal trade negotiations with Taiwan on behalf of the governor, and he specifically cited the use of KFx technology in the project, according to documents recently released by the governor's office.

At one point he owned more than $126,000 in KFx stock.

Bundy said the state's ethics law is "not a model of clarity" with regard to financial investments by state officials. Many other states cap the dollar value or percentage of stock shares that can be held by a state official simultaneously involved with a company on official business.

Bundy said he thinks state officials should own no more than $10,000 worth of stock in a company they are dealing with on state matters.

One of Tuesday's new revelations in the Bundy report was that on Oct. 1 - the date of the first Anchorage Daily News report about Renkes' stock ownership in KFx - the attorney general had a technician delete "many" e-mails from his office account, Bundy said.

Bundy said he asked Renkes about the deleted e-mails and Renkes said he was "unaware" of the Daily News article before he had the messages deleted.

Renkes, in his first interview since the allegations surfaced in October, told The Associated Press that he felt vindicated by the report.

"I knew in my heart that was the truth. I did not resign because I knew it was the truth," he said. "I had faith that this would come to its proper conclusion. And it has."

Bundy's findings aren't the last word on the KFx matter, Croft said.

"This is very worrisome conduct by the person to whom we've entrusted (Alaska's) gas line negotiations," Croft said.

Bundy said Renkes made some mistakes, though he said it is up to Murkowski to decide whether to penalize him.

Renkes incorrectly assumed his dealings with Taiwanese officials on behalf of the state were not "official actions," Bundy said. Renkes should have informed Murkowski of his KFx stock ownership and he should have sought a legal opinion about the potential conflict of interest, Bundy said.

Renkes said he did not request an ethics determination because he had a different interpretation of the law.

"Mr. Bundy says I drew the line in the wrong place," Renkes told AP. "I should have (requested a determination) and I regret that I didn't."

Bundy said he doesn't believe Renkes promoted the coal agreement or cited KFx technology to further his own financial interests.

Nevertheless, Renkes was fully aware that his ownership of KFx stock gave him "a personal financial interest" in the outcome of the coal negotiations, Bundy said.

State legislators grilled Bundy for hours in a Senate Judiciary hearing on Tuesday afternoon about his report and whether it showed significant ethics violations by Renkes.

Sen. Kim Elton, D-Juneau, said he was disappointed that most of the discussion focused on the legality of Renkes' actions.

"The question is whether what he did was right or wrong," Elton said. "I think what he did puts a pall over government."

Elton said Renkes would be doing a service to the government and to Alaskans if he stepped down from his post.

House majority leader John Coghill, R-North Pole, said Bundy has effectively cleared Renkes of wrongdoing, though the report showed a gap of communication between Renkes and Murkowski on a potential conflict of interest.

"He was doing what was required of him, but technically could have done better," Coghill said.

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