Kroger briefed Kitzhaber on Hayes probe

PORTLAND — Gov. John Kitzhaber was briefed about a criminal investigation involving his companion, Cylvia Hayes, in a meeting with Oregon Attorney General John Kroger before Kitzhaber took office in January, according to a Portland newspaper.

Kroger told The Oregonian the main purpose of the Dec. 2 briefing was to personally inform Kitzhaber that investigators had concluded weeks earlier Hayes had not done anything wrong.

Kitzhaber told the newspaper this week he had no idea Hayes had been under criminal investigation — and if he had, he would not have taken part in the briefing.

The investigation focused on whether Oregon Department of Energy officials improperly persuaded the winner of a $200,000 contract to steer a $60,000 subcontract to a company co-owned by Hayes.

Kroger, accompanied by his chief criminal counsel, Sean Riddell, also advised Kitzhaber during the briefing that Hayes should repay the $60,000.

The meeting was confirmed by notes released to The Oregonian by Kitzhaber's office in response to a public records request.

Kroger said it was perfectly appropriate for the attorney general to brief the incoming governor on an important investigation.

But the newspaper said a briefing about a case in which the governor-elect's companion had been under criminal investigation was considered unusual.

The meeting came nearly four weeks before the state Justice Department announced there would be no criminal charges. Meanwhile, attorneys for the four Energy Department officials still under investigation had been asking unsuccessfully for any information about the case.

Even former Gov. Ted Kulongoski, who had asked for the investigation, had received only scant briefings, his staff said. Nearly a month elapsed after Kitzhaber's briefing before Justice Department lawyers on Dec. 27 gave senior Kulongoski aides a thorough update on the case, said Tim Nesbitt, formerly Kulongoski's chief of staff.

"We were in waiting mode from late August on," Nesbitt said. "At some point around Dec. 8, we got these first indications of what was coming. We didn't get any details until Dec. 27."

Kroger disputes Nesbitt's account. He said he personally kept Kulongoski's office briefed on the status of the investigation. He declined to give details, citing attorney-client privilege.

"I have no desire to refute what they say," Kroger said. "They are our client. I can certainly tell you that anytime a client asks for information, we give it."

Records obtained by The Oregonian also show the Justice Department issued a criminal subpoena for Hayes' bank records in September, when Hayes said Kroger's office told her she was merely a witness in the case.

The Justice Department launched the criminal investigation in August, a delicate time for Kitzhaber, who was locked in a tight race with Republican Chris Dudley.

Kroger said that, because of the relationship between Hayes and Kitzhaber, he immediately cut off contact with the Kitzhaber camp when the investigation began. His silence ended Dec. 2, when he and Riddell met with Kitzhaber and two senior Kitzhaber aides, Patricia McCaig and Tom Imeson.

"The meeting was my choice," Kroger said. "I had previously given a rundown of the major legal cases to a Kitzhaber official. I had said at that time that most of them could wait until Kitzhaber was sworn in as governor. The one that he needed to know about immediately was the Energy Department investigation."

Kroger told The Oregonian he suggested that Hayes pay the money back because the Justice Department was considering a lawsuit to recover the payments. Kitzhaber responded that it was up to Hayes whether or not her firm repay the money, Kroger said. Hayes has declined to repay the $60,000.

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