The Justice Department has started a formal investigation into charges that Cleveland's major banks and a private utility company conspired in an attempt to force the city to sell the municipally owned power company.
Officials of the Cleveland Electric Illuminating Co. and the Cleveland Trust Co. acknowledged that they have received "civil investigative demands" from the Justice Department. The demands are similar to subpoenas.
The issuance of such demands signifies that the government investigation has entered the formal stages.
But a Justice Department spokesman said yesterday "we still don't have sufficient information to determine if there has been a violation of antitrust laws."
The investigation stems from charges by Cleveland Mayor Dennis Kucinich that the city's banks and utility conspired last December to force the city to sell its utility company, the Municipal electric Light System, to CEI as a condition of saving the city, which was on the brink of bankruptcy and owed $15 million to the baks.
Kucinich told several congressional bank oversight committees, the Justice Department and bank regulators that M. Brock Weir, Cleveland Trust chairman, said he and the other bankers of the city would roll over the city's debt if Kucinich would increase city income taxes and sell the public utility, known as Muny Light, to CEL Muny Light serves about 20 percent of Cleveland's residents, at a lower price than CEI charges the other 80 percent.
In a special election in February, Cleveland's voters raised the income tax, but supported Kucinich's efforts to keep Muny Light under city ownership.
Kucinichhs flamboyant style and attempt to make Muny Light a rallying point in an anti-business campaign angered many of Cleveland's business leaders, but they denied ever attempting to force the city to sell the utility.
A report issued by the Federal Reserve Board said its investigation found no indications of collusion, but found some support for many of Kucinich's allegations.