Utah utility boss who failed to prevent alleged fraud gets $238,005 severance
The public utility general manager who failed to prevent his subordinate from carrying out an alleged financial fraud is leaving the company with a retirement package worth almost a quarter-million dollars.
Blaine Stewart, whose tenure as Heber Light and Power's general manager began in 2008, was relieved of all day-to-day responsibilities Aug. 8 and will officially retire Nov. 26.
"I'm 71, and I've put in a lot of years with the electric service," Stewart said. "It's time for me to pursue my other interests in life."
Stewart will receive a total of $238,005 from the utility company, according to his severance agreement, which was obtained through a public records request. Stewart had planned to leave the company, which is jointly owned by the taxpayers of Heber, Midway and Charleston, on March 31, 2015, but the company's board asked him to retire early.
"We paid him out so he would retire early," said Midway Mayor Colleen Bonner, who sits on the utility's board. "We just needed to get the company moving forward in a better direction."
Stewart said his early retirement had nothing to do with his oversight of former chief financial officer Anthony Furness, who awaits trial for allegedly defrauding the company over the course of more than three years. Between February 2010 and May 2013, Stewart signed off on several of Furness's expense reports that allegedly included a combined $51,365.54 worth of personal expenses.
Furness, 55, whose preliminary hearing in 4th District Court on one count of second-degree felony theft by deception is set for Oct. 8, was able to carry out the alleged fraud in part because Stewart simply read a front-page summary of the expense reports and neglected to review credit card statements or receipts, according to court documents.
Furness's alleged fraud played a part in the downgrading of Heber Light and Power's bond rating in May due to "concerns regarding the utility's governance following reports of fraudulent activities by a former employee," according to Fitch Ratings, one of the big three U.S. ratings agencies.
"It looks like, because of the Furness issue, [Stewart] expedited his retirement," said Heber City Councilman Erik Rowland. "And it appears that the board, in order to expedite his retirement, just gave him a golden egg."
The early retirement agreement includes $150,000 in severance pay, a $30,000 contribution to his 401k and money for unused vacation, sick leave, paid holidays and insurance benefits. Stewart will also earn $90.06 per hour for any additional work related to the criminal prosecution of Furness, or any civil action taken against him, according to the severance agreement.
By paying Stewart severance, moreover, Heber Light and Power violated its own personnel policy. A clause in the policy, culled from a report by Heber City Manager Mark Anderson that was presented at a City Council work meeting on Aug. 21, states that the company will not pay severance to a salaried manager like Stewart who "voluntarily resigns, is discharged for cause, or retires."
Heber Councilwoman Heidi Franco, who has been critical of the utility's fiscal behavior, welcomed Stewart's removal but opposed the severance package. Franco blamed Heber's mayor, Alan McDonald, who serves as chairman of the utility's board, for signing off on what she felt was an undeserved retirement package.
"It's very concerning," Franco said of Stewart's retirement package. "It's absolutely outrageous how much spending they love to do at the power company."
Shortly before Stewart retired, McDonald removed Franco and fellow council member Kelleen Potter from the utility's board of directors for reasons that are in dispute.
"It comes down to the fact that [Franco] and [Potter] were asking too many questions, and from the chair's perspective, the answers to those questions were a little bit too difficult to deal with," Rowland said. "It was easier just to remove them than continue to ignore them."
McDonald declined to be interviewed for this story. But in an Aug. 6 editorial in the Wasatch Wave announcing Stewart's retirement, the mayor explained that removing Franco and Potter from the company's board was "necessary to preserve the integrity and viability of the company."
Noting that the company's bylaws did not require him to justify the removals, McDonald nevertheless offered some reasons. Among them was that Heber Light and Power's employees disapproved of the two directors' actions while on the board.
McDonald further noted that Franco violated a confidentiality agreement by doing interviews with local newspapers including The Salt Lake Tribune, which ran a story on June 30 in which she criticized the utility for hiring Furness while he was on the run from Canadian authorities for similar criminal allegations of defrauding a power company he worked for in New Brunswick.
"Ms. Franco's public comments violated this agreement of confidentiality, and may ultimately jeopardize the outcome of the case," McDonald wrote in the editorial.
In her own editorial in the Wasatch Wave, published July 28, Franco offered a different interpretation of her and Potter's dismissals.
"It appears that by dismissing us, the mayor is trying to silence our questions about the incredible amount of spending and debt at HL&P," Franco wrote. "Kelleen Potter and I are willing to help the mayor fulfill his campaign promises to 'reform' HL&P. It appears he doesn't want this help."