According to Alaska’s Governor Frank Murkowski’s September 16th press release, Gregg D. Renkes, Alaska’s Attorney General, is one of Alaska’s representatives to the Taiwan-Alaska Trade and Investment Cooperation Council (“Council”). The Council is tasked with assisting in the development of Beluga’s low grade, undeveloped coal reserves at Cook Inlet in Alaska. KFx Inc. (AMEX: KFX, $8.08) is using the Council announcement and claims about its possible involvement in Beluga’s development in its stock promotion.
Mr. Renkes has a long and well established relationship with Governor Murkowski. He is not an elected official. Mr. Renkes was appointed Alaska’s Attorney General by Governor Murkowski on December 9, 2002. Mr. Renkes served as the Majority Staff Director of the U.S. Senate Committee on Energy and Natural Resources from 1995 through 1998. U.S. Senator Murkowski was the ranking Republican on the Committee. Prior to that Mr. Renkes was Chief of Staff and Chief Counsel to then U.S. Senator Frank Murkowski. Mr. Renkes coordinated the 1992 and 1998 Alaska political campaigns to re-elect then Senator Murkowski to the U.S. Senate and the Murkowski 2002 Alaska gubernatorial campaign. A recent Anchorage Daily News article describes Mr. Renkes as one of only two persons in Governor Murkowski’s “inner circle.”
On September 16th Governor Murkowski said that KFx’s coal upgrading process “is actually up and in operation.” Yesterday the Wall Street Journal reported that KFx itself concedes it “still isn’t operational after 20 years of development.” Governor Murkowski’s statement benefited KFx’s stock promotion and is not just wrong but suspicious.
At the time that the Governor made his pronouncements concerning KFx and the Council, Mr. Renkes had a personal holding in KFx stock and a long series of other KFx dealings dating back at least to 1998.
According to a series of filings made under Alaska State law, Mr. Renkes bought 12,000 KFx shares on October 23, 2003 and 3,000 KFx shares on November 14, 2003. Mr. Renkes executed these purchases, which are disproportionately large in comparison to his reported trades in the stocks of other companies, 25 days and 3 days before a KFx stock promoter made an appearance on CNBC’s Kudlow & Cramer show and promoted KFx’s stock on the show on November 17, 2003. Mr. Renkes made other KFx stock purchases and sales during 2004.
In October 2001 KFx granted Mr. Renkes 25,000 shares of KFx common stock for “professional services valued at $91,250.”
In 1999, according to the Center for Responsive Politics, Mr. Renkes’ firm, Renkes Group, Ltd, received $40,000 from Thermo Ecotek Corp., which invested approximately $68 million in a failed KFx plant in the late 1990s.
In addition to having been a KFx-paid advisor and KFx stock trader, Mr. Renkes has been and may still be on KFx’s Advisory Board. In August 1998 Ted Venners, as KFx’s Chairman and Chief Executive Officer, appointed Mr. Renkes and Ted’s brother John Venners as two members of a ten person Advisory Committee to KFx’s Board of Directors.
Furthermore, in 2001 Mr. Renkes and John Venners were on the Board of Directors of Reliable Power Inc. Reliable attempted to acquire a tiny Australian public investment fund company called Pinnacle VRB Limited. In a convoluted plan, quite similar to KFx’s Kanturk scheme, Reliable made its bid based on alleged third-party’s funding while admitting that it was not advised of the third-party’s own funding source. In September 2001 Reliable’s bid to acquire Pinnacle failed having gotten just 3.5% of Pinnacle’s shareholders approval.
According to a US Business Directory listing, Reliable is headquartered at 2300 Clarendon Blvd., Arlington, VA. According to KFx’s SEC filings, KFX leases space at that same address.
Governor Murkowski did not disclose the Attorney General and Council member’s many serious conflicts of interest at any time relevant to any of his two announcements. Kfx, despite having been already criticized for its disclosure failures related to its Alaska dealings, has yet to acknowledge Mr. Renkes’ grave conflicts. Mr. Renkes did not advise KFx’s public shareholders of his conflicts at any time relevant to KFx’s releases.
In yesterday’s Wall Street Journal article about KFx’s disclosure problems, Ted Venners is quoted as saying “We have nothing to hide, and if there’s anything we can do to be more transparent, we want to do it.” In our opinion, the flaky but complicated promotion undertaken by KFx could not be more transparent.
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