A group of five current and former top federal employes, including William J. Casey, director of the Central Intelligence Agency, owns a company that is part of a consortium seeking loan and price guarantees from the U.S. Synthetic Fuels Corp.
The company, Energy Transition Corp., is the managing partner in the consortium that was chosen last week by the synfuels agency as one of five finalists competing for varying types of loan and price supports. The consortium wants to set up a plant in North Carolina for the conversion of peat into methanol.
A spokesman for the CIA, Dale Peterson, said Casey is a "small, inactive stockholder" in Energy Transition and "knows nothing about the workings of the company."
The other partners in the firm are: Robert W. Fri, former deputy administrator of the Energy Research and Development Administration; Charles W. Robinson, former deputy secretary of state; Frank G. Zarb, former administrator of the Federal Energy Administration, and William Turner, former U.S. representative to the Organization for Economic Cooperation and Development.
All five of the partners served together during the Ford administration. During the administration, Casey served both as head of the Export-Import Bank and at the State Department as undersecretary for economic affairs. Before that, he was chairman of the Securities and Exchange Commission.
There is no suggestion of any impropriety in connection with Energy Transition's application.
Fri said the five own roughly equal shares, but profits, if and when they occur, would be distributed unevenly, the bulk going to the two owners who actively run the firm. They are Fri, the president, and Robinson, the chairman.
Casey did not include his interest in Energy Transition in his initial financial disclosure statement filed Jan. 9, 1981, when his prospective nomination was under consideration by the Senate Select Committee on Intelligence. The firm was formed in early 1979.
In August, however, Casey amended his disclosure statement to include 10 additional holdings, including his interest in Energy Transition. In the amended statement, he described the value of his stock at somewhere between $5,000 and $15,000.
Unlike many other Cabinet-level officials, Casey did not put his assets into a blind trust.
Fri declined to disclose how the companies in the consortium would benefit if the project is successful.
The consortium, called Peat Methanol Associates, wants to build a plant near Creswell, N.C., that would be capable of converting 676,500 tons of peat a year into 67.5 million gallons of methanol. The principle source of financial backing for the project is the Koppers Co., acting through a subsidiary called North Carolina Synfuels Corp.
Fri said the consortium is not seeking a loan guarantee covering the cost of the entire project. Instead, it wants a limited loan guarantee that would protect the consortium in the event interest rates rise higher than anticipated in the proposal.
In addition, the consortium wants the Synthetic Fuels Corp. to provide price supports for the methanol. This would protect the consortium if prices of natural gas or crude oil, the principle competing fuels, fell below methanol prices, making the plant's product uncompetitive.
The federal support would function to "insulate us from abnormal events" in the area of interest rates, oil prices and gas prices, Fri said.
Fri said the question of Casey's involvement with the firm comes up regularly--"we've discussed this at board meetings"--but the group has been unable to resolve the question: "Should we ask him to turn in his shares?"
Casey does not, Fri pointed out, attend board meetings or participate in the operation of the firm in any way. Before his appointment as CIA director, Casey served as the secretary of the board.
Fri said the group shared a common entrepreneurial spirit, and, "We set out to see if an entrepreneur could succeed in the synfuels business."
In a brochure, the firm said it specializes in determining new markets and technology; obtaining financing for projects, and, in the area of government policy, the anticipation of "the course of future government policy," the securing of "necessary cooperation and approvals," and the encouragement of government "to create the climate in which the private sector can operate successfully."