Attorney general's involvement in Taiwan coal deal goes deep

Posted: Tuesday, December 07, 2004

ANCHORAGE - Attorney General Gregg Renkes played a much larger role than he previously stated in pushing a $1 billion coal deal between Alaska and Taiwan that would benefit a Denver company in which he owned stock.

According to documents obtained by the Anchorage Daily News and reported in a copyright story, the attorney general was deeply involved in structuring the deal and promoting the company, KFx Inc., as a key player.

Documents show Renkes brought the company to the attention of trade officials, wrote to Taiwanese officials under Gov. Frank Murkowski's signature to pitch the company's coal-processing technology, rewrote a trade agreement to benefit the company, prodded state officials to move the deal forward and traveled to Taiwan to promote the project, according to the newspaper's report.

All the while, Renkes actively traded KFx stock - the largest single investment in his portfolio - and stood to profit if the deal went through.

Former federal prosecutor Robert Bundy is investigating whether Renkes violated state ethics rules. State law bars public officials from using or attempting to use their office for personal gain.

Renkes, who has not spoken publicly about the allegations since October, said in September that he had distanced himself from the trade negotiations and it was not his mission to promote KFx. In October, Renkes said he acted in full compliance with the law and that he sold his stock in the company, donating the profits to charity.

The Beluga coal field, 60 miles west of Anchorage, holds more than 1 billion tons of proven coal reserves, but it's wet and has low heat value.

KFx says it has a process of drying commercial quantities of coal called K-Fuel. The process has never been successfully employed in an industrial setting, but the company reports that it has worked in tests.

Renkes' disclosures of his KFx investments in filings with the Alaska Permanent Fund Corp. show he bought and sold KFx stock in the months leading up to the signing of the Alaska-Taiwan coal agreement Sept. 16. On that day, he owned $122,485 worth of KFx.

Renkes also had consulted for KFx and owned a business with a company lobbyist, who was a KFx co-founder and the brother of its chief executive.

Among the newly released documents is an exchange of e-mails between Renkes and Ida Yao, the state's trade representative in Taiwan. In an April 30 e-mail, Renkes instructed Yao to copy him on all Beluga coal related communications to the governor.

"He is relying on me to manage all aspects and contacts related to this project," Renkes wrote.

According to the records, Renkes' involvement in the Beluga coal deal goes back to Nov. 5, 2003, when he joined Murkowski, Taiwan president Chen Shui-Bian and scores of Alaska and Taiwanese business people on a train ride south of Girdwood.

On Nov. 14, 2003, Renkes bought 3,000 shares of KFx stock, increasing his total to 15,000 shares. On Dec. 1, he purchased another 500 shares.

The state began seriously courting the Taiwanese in the early part of 2004.

On Jan. 4, Renkes flew to Taiwan as a delegate of the National Association of Attorneys General. While there, he met with Taiwanese officials to discuss Beluga coal, according to a gift disclosure he filed.

On Jan. 15, five days after returning from Taiwan, Renkes responded to an e-mail from state trade specialist Patricia Eckert. He told her that "a lot of ground work needs to be done by me asap to pull the key commercial people together around the development concept."

On Jan. 20, Renkes sold 1,500 shares of KFx. He sold another 1,000 shares Feb. 3, and 500 more Feb. 10.

Renkes helped arrange a March trip to Alaska by potential Taiwanese coal buyers. The delegation of six Taiwanese businessmen met with state trade representatives and five KFx executives.

At the conclusion of the trip, Renkes led a news conference to draw attention to the coal project. KFx's director of projects, Rick Van Zyle, spoke about how K-Fuel could be the key to launching Beluga development.

That month, Renkes sold 500 shares of KFx stock, then bought back 500 shares in April.

On April 20, Kang Ning-Hsian, senior adviser to Chen Shui-Bian, wrote to Murkowski the Beluga coal did not meet his country's quality requirements and questioned whether the costs of upgrading it would make the coal too expensive.

Murkowski's response was penned by Renkes. He urged Taiwan to commit to the Beluga project and touted KFx as the solution to quality concerns.

That same week, on May 4, Renkes bought another 300 KFx shares.

Murkowski visited Taiwan later that month to attend the presidential inauguration and hold meetings on coal and other trade matters. Present at a May 21 breakfast meeting was KFx lobbyist John Venners.

On June 15, Renkes bought another 100 shares of KFx, then another 200 shares on Aug. 3.

Two days later, Renkes wrote Yao, urging her to persuade the Taiwanese government to commit to the deal.

On Sept. 9, a week before the signing ceremony, Renkes sent to Taiwan a version of the agreement that he had rewritten. The new draft doubled the amount of coal the Taiwanese would buy, requiring them to direct government-owned utilities to purchase up to 8.8 million tons a year "on a long term basis." In addition, Renkes added language committing the Taiwanese to encourage other Taiwanese companies to buy Beluga coal processed by KFx.

Alaska and Taiwan signed a memorandum of understanding in which Taiwan said it would use its "best effort" to get its utilities to "consider" Beluga coal. If the quality were good enough and the price competitive, Taiwan would consider long-term purchases of up to 4.4 million tons a year.



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