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Crow Wing Power board members say state AG making inquiries into co-op

Board President Bob Kangas (foreground) discusses transparency and the subject of $70,000 bonuses paid to directors in 2006 during a sit-down with the Dispatch March 17. Steve Kohls / Brainerd Dispatch1 / 3
Director Bryan McCulloch (center), speaks during a Crow Wing Power meeting Jan. 11. McCulloch has been publicly critical of Crow Wing Power management and has stated he came forward after roughly five years of futility trying to address impropriety within the co-op. Steve Kohls / Brainerd Dispatch file photo 2 / 3
Members of Crow Wing Power were granted access to a Board of Directors meeting Thursday, May 16, after being denied by co-op authorities for months. During proceedings, attendees were notified of inquiries the Minnesota Attorney General's office is making into possible impropriety by company officials. Steve Kohls / Brainerd Dispatch3 / 3

The Minnesota Attorney General's office is making inquiries into Crow Wing Power, per members of the co-op board and those who attended a closed directors meeting Thursday, May 16.

Attendees and directors spoke with the Dispatch, either in person on Crow Wing Power grounds, or during phone interviews throughout the day. Accusations of impropriety have been leveled at Crow Wing Power officials regarding past business dealings and management of the co-op.

While the issue of transparency and opening meetings to co-op members dominated discussions, those who attended the meeting said Crow Wing Power attorney Paul Johnson informed members he was in contact with Assistant Attorney General Joe Meyer, who's making inquiries into the electric power cooperative that serves roughly 38,000 members in Crow Wing, Cass and Aitkin counties.

A motion to conduct a forensic audit on Crow Wing Power died without a second during proceedings.

Directors Dwight Thiesse, Bryan McCulloch, Gordon Martin and Paul Koering, along with attending member Gary Bakken, all confirmed these developments. Bakken said he submitted 17 documents for review by the attorney general. Representatives of the Minnesota Attorney General's office—including Meyer—would neither confirm nor deny the matter and repeatedly declined to comment after multiple requests over several days.

"The board received testimonies from several people, their auditing firm, various questions asked round the table," Bakken said. "There seemed to be real concern of criminality, about the investigation going forward, who's doing the investigation."

Johnson did not return calls for comment. Board President Bob Kangas, along with members Doris Mezzenga, Gert Roggenkamp, LuAnn Nelson and Ric Larson also didn't respond to requests for comment.

McCulloch said Meyer is requesting, among other items, all available documents that pertain to the sale of Hunt Technologies, a for-profit subsidiary of Crow Wing Power, in 2006.

"I welcome this inquiry by the attorney general," Koering said. "And if this somehow removes this cloud that's over the co-op, that's a good thing."

Crow Wing Power's conflicts largely came to light with the revelation of a royalty agreement signed Nov. 20, 2008, that stipulates three executives from Crow Wing Power—CEO Bruce Kraemer, former Chief Operating Officer Doug Harren and former Chief Financial Officer Don Nelson—retain royalty interests to a manganese deposit by Emily.

If developed, the deposit has the potential to garner executives millions over the course of the mine's lifespan.

However, the royalty agreement didn't become known to the wider public until the Minneapolis Star Tribune published an article on the subject Aug. 31. Members of the co-op's executive staff, along with board directors stated members were not notified of the royalty agreement in 2008 or subsequently.

Prior to that, the sale of Hunt Technologies footed $23 million that's been spent developing the Emily deposit development. Since then, public scrutiny has been directed at $490,000 in bonuses doled out to seven board members, as well as concerns executives took money on the side as well.

Media outlets have been barred from observing board meetings since the January gathering of co-op representatives, staff and executives. In the intervening months, Crow Wing Power members have also been repeatedly denied access to these meetings, until Thursday.

While the board has voted to allow outside observers to attend in the past, McCulloch said most decisions largely rest with the executive staff, particularly Kraemer. McCulloch said he wasn't sure how much Kangas, who's often tapped to represent the unified opinion of the board, has input in the process.

"The board hasn't had much of a say in this," McCulloch said. "They just leave it up to management."

McCulloch added Johnson presented it as a matter of implementing board policy. In discussions with the Dispatch, board members cited a desire to maintain an orderly, productive environment for decision-making free of outside interference.

"I see nothing wrong with having the media in our meetings. I agree with that," Koering said. "I want members to be at our meetings. I have no problem with that. I can't speak for the other board members, but I agree."

In keeping with a proposal by Bakken, McCulloch said he made a motion to initiate a forensic audit of Crow Wing Power. Koering said he seconded it, but withdrew his support of the motion about five minutes later when board members were informed of the state attorney general's inquiries. Without a second, the motion died.

"That could be an option down the road," Koering said of the forensic audit. "I wanted to second it after some more information, instead of going through with it half-cocked."

Gabriel Lagarde

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