Circle Of Strife

Your guide to lingering questions about a state contract dogging Kitzhaber, Kroger.

When Gov. John Kitzhaber took the oath of office for his third gubernatorial term on Monday, his longtime companion, Cylvia Hayes, stood by his side.

But while Hayes was an onlooker Jan. 10, she remains at the center of a festering controversy involving the Oregon Department of Energy that may blow back on Kitzhaber and his fellow Democrat, Attorney General John Kroger.

It's also an investigation that involves other big names in Oregon political circles.

Just what role Hayes, a Bend renewable-energy consultant, played in securing a May 2010 subcontract from ODOE for her company TEEM Inc. remains unclear. (Hayes has said she did nothing wrong).

Although Kroger's Department of Justice began its investigation into the contract in August and finished Dec. 29, the department hasn't yet released the underlying emails and interview transcripts.

"It is a comedy of errors that this whole process has taken so long," says Bill Gary, an attorney for former Energy Department director Mark Long. "It's increasingly obvious that politics are driving the whole affair."

Gary says the underlying question­—did ODOE employees improperly steer business to Hayes?—is not complicated. But he says the investigation by Kroger, a Kitzhaber ally, took on a complexity that's continued because the investigation involved Kitzhaber's girlfriend.

Kitzhaber, Kroger and Hayes are just some of the players. There's also now-former Gov. Ted Kulongoski, who got a briefing in the final days of his term after the investigation. Kroger's office said investigators "provided legal advice to [Kulongoski] on the related legal matters," but neither DOJ nor Kulongoski's spokeswoman would elaborate.

The three ODOE employees placed on leave in August remain suspended. On Jan. 6, state officials offered "name clearing" hearings to all three, and a fourth to Mark Long, who was placed on leave at the end of the investigation.

Here's a three-step guide to follow the rest of the saga.

1) The Long history: DOJ officials did not seek to interview Long until late in the probe—Dec. 13, Gary says. Often, investigators delay interviewing those they suspect of wrongdoing, gathering as much evidence as possible. Long declined to talk to DOJ, an unusual stance for a senior state employee.

Long's decision led his then-boss, Oregon Department of Consumer and Business Services director Cory Streisinger, to place him on leave. Streisinger served as counsel to Neil Goldschmidt from 1987 to 1991 and as general counsel at the Port of Portland after that.

As Goldschmidt's counsel during his only term as governor, Streisinger worked closely with Kulongoski, then insurance commissioner, on a major economic and political issue: workers' compensation reform.

The two of them coordinated with then State Accident Insurance Fund director Stan Long, father of Mark Long—the former ODOE chief. Stan Long also had previously served as deputy attorney general when Dave Frohnmayer was AG.

Frohnmayer went on to serve as president of the University of Oregon from 1994 to 2009. There, Kroger criticized his administration's handling of athletic director Mike Bellotti's contract, which led to the firing of UO general counsel Melinda Grier. That firing in turn caused Grier's husband, a senior DOJ lawyer, to resign. Frohnmayer and Gary are representing Mark Long, and have filed a tort claim notice against DOJ and the state, claiming the investigation was a "violation of his Constitutional rights."

2) Enter the Kroger adversary: While Long's attorneys possess deep knowledge of DOJ operations, another of the suspended DOE employees, Shelli Honeywell, is represented by David Angeli, an attorney who is making something of a practice of going up against Kroger.

Angeli represented an Enron defendant against Kroger when Kroger was a federal prosecutor; represented hotelier Mark Hemstreet in a successful suit against Kroger's DOJ; and represented Hood River Juice in a case that saw Angeli's client convicted but led Kroger's protégé, assistant AG Brent Foster, to resign over his role in the case.

Angeli declined to comment, but Gary has plenty to say about Kroger's actions.

"We think the AG's office has violated our client's rights," Gary says. "The suggestion that the same office that has been notified that we have a claim against them should advise Gov. Kitzhaber on whether our client and others should still be employed by the state is fraught with peril, and puts the integrity of the AG's office at risk."

DOJ spokesman Tony Green says his agency handled the ODOE investigation thoroughly and professionally. "There is no conflict of interest here," Green says.

3) What's next?: The suspended employees have until Jan. 13 to decide whether to accept name-clearing hearings. After that date or the hearings, which ever comes later, the DOJ investigative file, replete with interviews with Hayes and the ODOE employees, will become public.


John Kroger contributed $7,000 from his political action committee to John Kitzhaber's 2010 gubernatorial campaign.

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