United SIates Office of Government Ethics _ , P.O. Box l4l08 ^St"*' Washington. DC. 20044 UN 23 1985 Mr. C. H. Dean, Jr. Dear Mr. Dean: This letter is to confirm the concerns I expressed in my conversation with you on Friday the 20th regarding the matters set forth in Mr. Sanger's memorandum dated May 5, l986 discussing the contract between TVA, Stone and Webster Engineering Corporation and Stemar. As TVA's designated agency ethics official, Mr. Sanger had properly provided us with a copy of the memorandum pursuant to S C.F.R. S 738.3l3. Although we have not seen any of the underlying documents mentioned in Mr. Sanger's memorandum, a member of my staff was present at the June ll hearing at which the panel of TVA representatives did confirm crucial facts in that opinion. Mr. White is considered a TVA employee, he docs have contractual and financial relationships with Stone and Webster, and he has already taken action affecting them through the use of their services in analyzing certain data. We need not sec the terms of a waiver to believe that actions of this magnitude by an employee which specifically involves his or her private employer is wrong from an appearance sake. Those actions should not have occurred nor should they continue. Further, we agree with Mr. Sanger's analysis of the application of l8 U.S.C. S 208 to the actions taken by employees of TVA with regard to their private employing companies and agree that it is imperative that Mr. White, Mr. Kelly and any other employees of private companies working for TVA In employee capacities immediately cease participating in any matter through decision, approval, disapproval, recommendation, the rendering of advice, or investigation in which their private employers have a financial interest. Such participation- should ccaso without regard to any waivers which may have been given. We believe at a minimum, continued actions on the part of those TVA employees will severely damage the credibility of TVA's program. It may also subject the employees personally to additional difficulties under the restrictions of section 208, subject their private employers to contractual challenges, and further exacerbate whatever difficulties the Board may face personally because of their participation in these arrangements. You stated in our conversation that TVA's General Manager, Mr. Willis, issued in April a written direction that contract employees cease taking all official actions affecting their private employers. I appreciate your offer to send that document to us. We have no wish to hinder TVA's attempts to correct its problems with its mclear power program, but we strongly believe that the best interests of the public and TVA are not served by the creation of a management system built on inherent conflicts. We believe that any goods and services required by the TVA's nuclear power program should be determined by objective decision-makers with no possible personal financial interest in the matter and that the provision of those services should not fall under the supervision of contract employees with financial ties to the providers. As you know my Office is responsible for overseeing the administration of the ethics program in the executive branch. We have a memorandum of understanding with the Department of Justice concerning our authority to give guidance to agencies and individuals regarding the application of the criminal conflict of interest statutes. If necessary we have the authority to order corrective action on the part of any agency or employee. 5 U.S.C. App. 6 S 402(b)(9). Your agency ethics official has taken a very strong and stand in a memorandum which could not have been a pleasure for him to write or for you to receive. It is important that the Board support him in his correct analyses of ethics issues or you will adversely affect the credibility of TVA's ethics program. We would like to offer our assistance to you in this matter in order that this can be resolved expeditiously and TVA can move ahead with its nuclear program, free from these difficulties. We will be contacting Mr. Sanger for additional information and may also contact the law firm providing independent cousel services to the Board. If you have any questions concerning this, please feel free to contact me. JUL I 1956 Mr. David H. Martin, Director U. S. Office of Government Ethics P.O. Box x4l08 Washington, D.C. 20044 Dear Mr. Martin: This is in response to yotir June 23 letter which expressed your concern! about the conflict of interest issues that have arisen in connection with TVA' s arrangements with Stone and Webster Engineering Corporation. I agree that the management of TVA's nuclear power program should not be tainted by impermissible conflicts of interest. I also agree that decisions regarding the acquisition of goods and services in connection with the nuclear program should be made in compliance with applicable laws. To assure that any possible conflicts of interest do not continue, on April ll, l986, TVA's Manager of Nuclear Power directed that loaned employees provided under TVA's arrangement with Stone and Webster cease all official actions affecting their private employer. In addition, the Inspector General has informed us that his investigation of TVA's arrangements with Stone and Webster is well underway and has recently been expanded to include other alleged conflict of Interest issues regarding TVA's contract with Management Analyses Company, a contract under which TVA obtained management services for the Browns Ferry nuclear power plant. We understand that the Inspector General's investigation involving Stone and Webster should be concluded within a few weeks. Ue will provide you with a copy of his report, together with any recommendations made by the independent counsel that has been obtained, as soon as all such materials are available. We will, of course, take prompt action on these findings and recommendations, and we will have our Ethics Agency Official, Mr. Sanger, coordinate these actions with your office. We appreciate your offer to assist us in resolving these Issues. Like you, we want this matter resolved expeditiously and in a way that is entirely consistent with all legal requirements. It is obviously important that TVA's troubled multi-billion dollar nuclear power program be permitted to move forward in a way that is not subject to legal challenge. If you have any further questions or would like more information about this matter, please contact TVA's Inspector General who is responsible for the current inquiry into these issues and is serving as the intermediary between TWA and the outside counsel we have selected to undertake a thorough and independent legal review. . . . . Principally prepared by James B. Hall and approved by N. A. Zigrossi. Mr. Norman A. Zigrossi Inspector General Tennessee Valley Authority 400 West Summit Hill Drive, E4 AM C-K Knoxville, TN 37902 Dear Mr. Zigrossi: On July 7, l986, we received • letter from Chairman Dean indicating that you ace continuing in your investigation of conflict of interest questions with persons serving under loaned-employee agreements. It was Don Campbell's understanding from your conversation of June 27th that your office had completed its investigation and was in the process of writing the report. Since that does not now appear to be the case, we feel securing answers to the following questions should be included as part of your investigation. We believe that these questions represent the minimum inquiry into determining whether a potential violation or violations of l8 U.S.C. S 208 has occurred on the part of any loaned-employee. We also believe your inquiry should encompass all loaned-employees, not just those from Stemar, Stone and Wester, and Management Analyses Company. l. How many individuals presently serve TV A under loaned-employee agreements? 2. What are their names, what are their TVA positions, and who are their private employees? 3. Which of these individuals have received waivers under l8 U.S.C. S 208<bXl) from the Board? 4. What actions by each affected individual have been waived by the Board pursuant to the express terms of the waiver? 5. Has any of the loaned-employees, regardless of the issuance of a waiver, taken an official TVA action by decision, approval, disapproval, recommendation, the rendering of advice, investigation, or otherwise in a particular matter in which his or her private employer has a financial interest or in which he or she has a personal financial interest separate from the private employer's? 6. If any loaned-employee has participated in such a matter, what was tho manner of participation and on which matter? |