The top official of the state’s university system has a personal financial tie to a company that stands to benefit from a prospective energy contract for the Orono campus that is worth millions.
University of Maine System Chancellor James Page signed a personal loan guarantee for an unknown amount to help finance his former employer, James W. Sewall Co., James Thelen, the university system counsel, said Friday.
Page backed the loan when he was chief executive officer of the engineering firm based in Old Town. Thelen said the loan has not been paid off.
The connection is relevant because Sewall is partnering with ConEdison Solutions, a New York-based energy services company that beat out three other finalists last fall to negotiate with the University of Maine on a project to supply steam and electricity to the Orono campus using a defunct Old Town mill. ConEdison is negotiating with the university for a long-term energy contract worth up to $150 million.
Thelen said Page had no conflict of interest in the pending contract because the process has been handled exclusively by campus officials so far.
“He doesn’t have any policy role” in the prospective contract, Thelen said. “By practice he has never gotten involved.”
However, the final contract will need the approval of the full board of trustees.
The deal has come under scrutiny this week following a Maine Sunday Telegram report that inside information was conveyed to ConEd and its partners – including Sewall – by Jake Ward, the university’s vice president for innovation and economic development. The report was based on secret recordings captured during discussions by ConEd stakeholders as they strategized over their bid.
Ward has denied the allegations.
On Friday, an audit committee of the system trustees said they found no evidence of wrongdoing by Ward, according to a resolution released after an executive session.
The committee also said Page had no conflict to date, but he should recuse himself going forward in the event Sewall Co. benefits from a final contract.
Officials within Sewall Co. have partnered with ConEd in its energy proposal. ConEdison is a New York firm that developed a plan to power the Orono campus with wood-fired steam and electricity from the abandoned paper mill and its biomass plant in neighboring Old Town.
PREFERENCE FOR RENEWABLE ENERGY
UMaine favored the ConEdison plan over three others, in part because of the university’s preference to repower the campus with renewable energy and to bolster a bioproducts research center it operates in one of the mill’s buildings. Its decision has been appealed by two runners-up in the RFP – or request for proposal – process, and ownership of the mill is the subject of an ongoing lawsuit.
According to the university’s code of ethics, it would be improper for a UMaine official to give any bidder an inside edge. It is improper for a top official to in any way benefit financially from the award of contract.
The university’s code of ethics states: “Neither the chancellor nor a president may have a direct or indirect financial interest in any contract entered into by the university.”
In an email Friday night, Thelen said the conflict policy doesn’t require disclosure and recusal unless the employee has an interest in a potential contract and has a role in, or influence over, the decision to award the contract.
“Since the chancellor has no role in this RFP, there hasn’t been a need for recusal,” he said.
The policy also states that conflicts of interest are prohibited by state law: “An executive employee may not have any direct or indirect pecuniary interest in or receive or be eligible to receive, directly or indirectly, any benefit that may arise from any contract made on behalf of the State when the state entity that employs the executive employee is a party to the contract.”
Thelen said the audit committee acted to preclude any appearance of conflict.
“We understand appearances are as important as reality,” he said. “The reality is, right now, there is no conflict.”
Page had another financial stake in Sewall, Thelen said. As CEO, he was an equity partner in the company. When Page left to become chancellor in 2012, Sewall bought out his stake.
Thelen said he did not know the amount of Page’s remaining financial interest.
The audit committee reviewed the contract talks after the story in the Maine Sunday Telegram spelled out a second concern – that a consultant on recorded phone calls involving the contract recounted how Ward communicated with and coached partners of ConEd.
Ward was not on the calls, but others who were recorded discussed information that Ward was said to have provided.
The Maine Sunday Telegram obtained several recordings of conference calls related to bid strategy. Participants included ConEd representatives, members of the company that intended to buy the Old Town mill, consultants and investors. The discussions also involved senior management at Sewall.
On one call, the consultant, John Richardson of Brunswick, refers to a meeting he and others had with Ward. Richardson said Ward provided ConEd’s team with insight into how the competition was going to be scored, and also indicated that the university president and chancellor would make the final decision.
Richardson says of Ward: “And he also turned to us and said, essentially, ‘This is yours to lose. And it’s been set up for you to do well.’ ”
COMMITTEE BACKS WARD
Ward has previously denied he gave the company any insider information, and the university system audit committee said Friday it had reviewed his role.
“(Ward) had no role in developing (the request for proposal) or the criteria by which responding bidders would be evaluated or scored. Based on this determination, the committee accepts Vice President Ward’s statement that he did not provide assistance to any bidder responding to (the RFP,)” the resolution read.
The resolution noted that one official already has recused himself because of a conflict. System Board Chairman James Erwin, an attorney with Pierce Atwood, stepped aside after a law partner told him recently that the firm has a client involved in the purchase of the Old Town mill.
The members of the audit committee heard no public comments or discussion about the resolution before passing it unanimously at the meeting, which was held in Orono.
Earlier this week, the state lawmakers who co-chair the committee that oversees education issues said they support an investigation into the allegations of insider information.
Sen. Brian Langley, R-Ellsworth, the Senate chairman of the committee, said: “After reading the story, I would say this matter needs to be investigated to bring all the facts to light. I would support a good, thorough investigation.”
The House chairwoman, Rep. Tori Kornfield, D-Bangor, agreed: “These are serious allegations, and I look forward to all of the relevant facts coming to light.”
On Friday, Kornfield didn’t have an immediate response to the news that Page has a financial interest in Sewall.
“I’d like to see it in print first,” she said.
Staff Writer Tux Turkel contributed to this report.
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