On the afternoon of Monday, July 15, in St. Paul, three men were granted an audience with Attorney General Keith Ellison and members of his staff to discuss ongoing allegations and investigations of impropriety at electric power cooperative Crow Wing Power.
The first was Gary Bakken, a Breezy Point City Council member and vocal critic of the cooperative. The second was a former high-level employee within Crow Wing Power who had knowledge of its inner dealings and has declined to be identified.
The third? Former Congressman Rick Nolan, a prominent figure of both business and politics in the Brainerd lakes area for the better part of 50 years. According to Bakken, while members of the attorney general’s office and its three guests hashed out the particulars, Ellison turned to Nolan and asked him what they hoped to get out of investigations into the co-op.
“Criminal prosecution and recovery,” Nolan replied. It was a sentiment -- later confirmed by Nolan -- the two others echoed as well.
During a phone interview Monday, Aug. 12, Nolan said he has received assurances from both Ellison and his staff that Crow Wing Power is being thoroughly investigated to determine if criminal and civil damages are necessary.
In a phone call to the Dispatch Tuesday, Aug. 13, Crow Wing Power spokeswoman Char Kinzer has denied any allegations of wrongdoing on the part of co-op officials.
“Anyone can request an investigation by the attorney general’s office,” Kinzer said. “We’ve done nothing wrong and have nothing to hide. If the attorney general’s office finds something, the board of directors will address it.”
Nolan said co-op officials should support external investigations and a forensic audit.
“If the board of directors and executive team is comfortable with their behaviors, they should welcome a forensic audit,” Nolan said. “They should welcome a thorough investigation to clear their names. A determination will be made whether a criminal or civil action is warranted.”
Kinzer said the issue of a forensic audit by a third-party firm -- which has been repeatedly proposed by critics of the co-op for months -- has been already addressed by the Crow Wing Power Board of Directors, who have decided to wait and accept any findings through an investigation by the attorney general’s office. If the situation warrants, she noted, a forensic audit will be initiated.
Nearly a year out, Crow Wing Power has seen its share of turmoil and criticism since the Minneapolis Star Tribune published an article Aug. 31, 2018, pointing to possible impropriety by co-op officials. This piece shed light on 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. 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. Kraemer has stated the royalty agreement would have to be renegotiated for the mine to move forward, but as it is now, in a court of law this agreement is still in effect.
Prior to that, the co-op sold for-profit subsidiary Hunt Technologies in 2006 and used $23 million in profits with the stated intention to develop the mine and give investment returns back to members. Since then, public scrutiny has been directed at $490,000 in bonuses for seven board members, as well as $1.9 million Kraemer was paid from the deal.
Crow Wing Power serves roughly 38,000 people in mostly rural areas of Crow Wing, Cass and Morrison counties. During the annual meeting June 8, the attending membership voted to advise the co-op’s board of directors to fire Kraemer. However, the board decided to disregard the advisory and later voted to retain Kraemer in his executive position.
Nolan speaks out
Nolan, a long-time co-op member, said his stance is based on a career in and out of politics on Capitol Hill, with stints as presidents of the U.S. Export Corporation and Minnesota World Trade Center sandwiched in between, as well as ownership of Emily Wood Products throughout.
The key, Nolan said, rests in the actions of Kraemer, the executive staff, as well as many members of the board that indicates unethical and self-serving business practices, as well as a cover-up.
Ellison’s office would not be taking the steps its currently undertaking, he said, if attorneys didn’t believe there was enough evidence to suspect criminal malfeasance. While area residents may be reluctant to call it out for what it is, he added, these kinds of abuses have, are and will be present in the lakes area.
“Corruption is not just in Chicago or New York and foreign places,” Nolan observed he’s often said in discussions, lectures and speeches over the years. “It’s alive and well right here. … Brainerd is not unfamiliar with this.”
“Co-ops are set up for the sake of and for the benefit of the membership,” he later added. “Not to be used as a private investment bank to personally enrich its board members or the staff that it hires. They have a fiduciary responsibility and, in my judgment, a moral, an ethical responsibility to use the trust that they have been given for the benefit of its members.”
As would be done in any similar situation -- both private and public sector -- where gross malfeasance is alleged, there needs to be an independent investigation of Crow Wing Power, Nolan said.
“The things that don’t smell right -- board members can’t get any details, the public can’t get any detailed information on what went on there, the membership at annual meetings couldn’t get any information,” Nolan said. “All the non-disclosure agreements -- it has the smell of hush money. Why would you not want to disclose something as important as this?”