More Energy Advisors May Have Conflicts
Newly released documents show that two officials of a Pasadena-based energy consulting company bought large amounts of Edison International stock before they were hired by the Davis administration to help rescue the state’s beleaguered utilities.
Vikram Budhraja, president of the Electric Power Group, and Mark Skowronski, an employee of the firm, bought multiple blocks of Edison International stock in January, just before landing a $6.2-million contract with the state.
Key details of potential conflicts of interest among Davis administration energy consultants are only emerging now, six months after many were hired, because the consultants were never asked to provide basic information required under state law.
“There seems to be real negligence here on the part of the governor’s staff to not tell them the rules,” said Bob Stern, president of the Center for Government Studies in Los Angeles and an author of the state’s Political Reform Act. “Somebody dropped the ball. . . . That is a big problem.”
That problem has been expanding over the past two weeks as new details continue trickling out. Last Friday, aides to Gov. Gray Davis announced that five consultants hired to help the state purchase electricity were fired for possible conflicts of interests.
Tuesday marked the first time the Davis administration released amended disclosure forms that included such important details as when the consultants bought and sold energy stocks.
One form was from Skowronski. It showed that he had purchased far more Edison stock than he had previously revealed. In all, he owned six blocks of Edison stock, each valued between $10,000 and $100,000.
He also disclosed buying for his wife’s retirement account a similarly valued block of stock in PG&E; Corp., parent of Pacific Gas and Electric Co., the state’s largest utility.
Skowronski divested those holdings on July 18 as part of an order by the governor, who had been stung by criticisms over secrecy surrounding his consultants. It was not immediately clear how Skowronski, who makes $150 an hour with the state, fared overall in the Edison transactions.
In March, he sold stock in energy producer Reliant Inc. valued between $10,000 and $100,000. At that time, he had been made the state’s lead contract negotiator with the Houston-based firm.
Skowronski could not be reached for comment on Tuesday but said in a July 9 disclosure form that he “had no dealings with Edison and have not had a conflict of interest.”
His boss, Budhraja, also has come under scrutiny.
Budhraja was singled out in a letter to the Securities and Exchange Commission by California Secretary of State Bill Jones as an example of possible insider trading.
Jones estimated that Budhraja had made profits of more than 40% in January buying and selling stock valued at between $20,000 and $200,000 in the parent company of Southern California Edison, Jones said.
According to state financial disclosure forms, Budhraja bought between $10,000 and $100,000 of Edison stock on the same day Davis declared an energy emergency and announced that the state would buy power for California’s cash-starved major utilities. Budhraja purchased another block of Edison stock five days later.
A former Edison executive, Budhraja also reported that he was paid more than $100,000 on a retainer to provide consulting services to the utility when needed. His services had not been requested since the third quarter of last year, according to the disclosure form.
Budhraja, who is being paid $275 an hour by the state, reported selling his Edison stock Jan. 29, which he said was the first opportunity to divest after going to work for the state. Among his duties has been to negotiate power purchase contracts and provide strategic advice.
Attorney Stephen Kaufman said Budhraja was simply a savvy investor.
“Mr. Budhraja was observing what has happening in the marketplace at the time, reading the newspapers, and saw what he thought to be a good opportunity to purchase these stocks.”
The latest details on stock purchases by state energy consultants came as Davis spokesman Steve Maviglio defended his own energy investments. They include San Jose-based generator Calpine Corp. and Houston power trader Enron Corp.
Maviglio was repeatedly questioned about the ethics of his holdings Tuesday during his traditional weekly media briefing with reporters, and remained defiant, insisting he had done nothing improper.
Spokeswoman Hilary McLean initially took questions from the two dozen print, radio and television reporters in attendance, but Maviglio, who was standing beside the podium, eventually came to his own defense.
“I can’t help myself,” he said as he approached the microphone.
Maviglio reiterated his stance that he was not privileged with any inside information unavailable to the public when he placed his order for Calpine stock on May 31. He said he made the move after reading newspapers and analysts’ recommendations.
He said he would be willing to divest the stock if Davis asks him to, but maintained his belief that the transaction did not violate any laws.
Reporters sharply questioned Maviglio’s insistence that he was not privy to more information on the state’s electricity purchases than the general public. Maviglio and McLean said they were out of the loop on such details.
Maviglio blamed the press for making his stock an issue.
“Perception is what you create,” he said.
The controversy, Stern said, underscores the importance of timely filing to safeguard the public interest.
“I think as many high-ranking people as possible should be filing these so we know of potential conflicts,” he said.
Times staff writers Daryl Kelley, Mitchell Landsberg and Robert J. Lopez contributed to this report.
