McCrory misstated Duke Energy holdings, sold stock after coal-ash spill
08/13/2014 9:42 PM
08/14/2014 11:43 AM
Gov. Pat McCrory failed to disclose his ownership of Duke Energy stock this year in two state ethics filings and sold the stock after a torrent of bad publicity about the company’s coal-ash spill, the governor’s office acknowledged Wednesday.
McCrory filed a new ethics and economic disclosure that now makes clear he owned at least $10,000 of Duke Energy stock on the last day of 2013, reversing disclosure filings he made in April and May. Public officials who “knowingly” do not disclose correct information about their financial interests are subject to possible criminal penalties.
A lawyer for McCrory said through a spokesman the incorrect filings were a mistake based on the lawyer’s misunderstanding of the time frame covered by the earlier disclosures. McCrory signed the forms.
McCrory’s communications director, Josh Ellis, said in an interview Wednesday that McCrory sold his stock after the Duke Energy plant in Eden spilled 39,000 tons of coal ash, a toxic sludge, and 27 million gallons of wastewater into the Dan River near the Virginia border.
The coal-ash crisis generated national news, put a spotlight on McCrory’s ties to Duke, where he worked for about 29 years, and prompted McCrory and legislators to propose laws about cleaning up coal ash that Duke Energy says could cost the company as much as $10 billion over the next 30 years. A major reform bill has not passed the General Assembly.
At least one group critical of the governor had called on McCrory in March to “disclose and divest” his Duke Energy holdings.
Ellis said he could not be more specific about the timing of McCrory’s stock sale. He said the governor, a Republican, sold his holdings sometime between Feb. 14 and April 15 this year. McCrory was not available for an interview, Ellis said.
“The stock was sold in response to repeated public requests via the media and to stop the constant, unfounded challenges of the governor’s character,” Ellis said.
Counsel takes responsibility
The governor’s main ethics disclosure statement, covering 2013, was required to be filed by April 15 this year – and McCrory turned it in that day. In the filing, McCrory made no mention of holding any Duke Energy stock as of Dec. 31, 2013. A supplemental filing in May also did not disclose that McCrory held Duke stock at the end of the year.
Ellis issued a statement Wednesday that he said could be attributed to Bob Stephens, McCrory’s general counsel.
“When the governor submitted his (Statement of Economic Interest) form in April 2014, he had divested himself of all utility stock,” the statement says. “The form was completed based on my understanding that the information to the question should be current as of April 15. Following discussion with the State Ethics Commission, it was clarified to me that disclosure should be based upon ownership as of December 31 and we took steps to correct it immediately.”
The forms only require disclosure of stock holdings of more than $10,000, but no additional specifics about the amount. McCrory has declined to say how much Duke stock he owned.
The Dan River spill was discovered by a security guard on Feb. 2. On Feb. 9, McCrory said in an interview with the Charlotte Business Journal that legislation aimed at cleaning up coal ash was likely.
On Feb. 14, McCrory indicated in an exchange with a reporter at a news conference that he still owned the company’s stock, saying, “I have some 401(k) and in my original 401(k) some Duke Energy value.” He declined to answer a follow-up question.
Ellis said McCrory sold the stock after that exchange.
In early March, Duke Energy CEO Lynn Good suggested that Duke customers – not shareholders – should pay for a broad cleanup of coal ash that was being discussed statewide. McCrory sidestepped the question about who should pay, saying at the time it was “the big issue” and should be left to the state Utilities Commission.
His likely opponent in 2016, Attorney General Roy Cooper, a Democrat, jumped on the issue, saying he would work to protect customers from getting the bill from Duke Energy.
McCrory announced his own coal-ash plan on April 16, and lawmakers made their own proposals later that were viewed as more demanding of Duke.
Since the spill, the company’s stock price has traded between $68.71 and $74.80. It closed Wednesday at $70.93.
Since the spill, McCrory sought to distance himself from Duke Energy, where he worked for nearly three decades, much of it in management jobs. He has emphasized that his administration filed a lawsuit against Duke related to environmental concerns and that he separates his job as governor from his ties to the company. He has tapped several former Duke Energy executives to serve in his administration.
A McCrory spokesman stressed the distance in May, amid continuing coverage of the coal-ash spill, pointing out that the governor’s ethics disclosure statement declared that McCrory did not own Duke stock. In a statement issued on May 1, Ellis pointed to the forms that had been filed on April 15.
“As public records have shown since April 15, the governor is not a shareholder of Duke Energy,” Ellis said. “This eliminates the often repeated, ridiculous and false, partisan left-wing attacks challenging the intent of our decisions and policies.”
There was confusion about that phrasing, particularly about precisely when McCrory sold the stock. At the time, Ellis would say only that the sale was “before April 15.” A May filing indicated that McCrory had sold stock from a related entity, Spectra Energy – though it included the notation that it had been sold “prior to April 15, 2014.”
The form asks for all information as of Dec. 31, 2013.
The News & Observer has sought for weeks to clarify the timing of McCrory’s sale, and McCrory’s office had said there was nothing new. On July 10, for example, Ellis wrote in an email message that “the governor has complied with all disclosure requirements.”
That changed late Wednesday with the new filing and follow-up interviews with Ellis.
Bob Phillips, executive director of the state chapter of Common Cause, which advocates for open and accountable government, said that he understands “mistakes can happen.”
But he encouraged the governor to be forthcoming about what transpired.
“Given what this stock is and what has happened in North Carolina regarding coal ash, however, one would hope there would have been better transparency,” he said. “Whatever the explanation is on why we didn’t know this, this should not have happened.” News researcher Peggy Neal contributed.
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