Five months after Deputy Secretary of Energy Daniel Poneman resigned and left the department’s Forrestal Building in Washington, he started a new job eleven miles away as president of a troubled corporation that he had championed while serving in the department’s top ranks.
Over five-and-a-half years as the department’s chief operating officer, Poneman approved or advocated giving hundreds of millions of dollars in contracts and other assistance to the United States Enrichment Corporation (USEC) during public hearings and private discussions with lawmakers and White House officials, according to interviews with those present.
The company, which processes uranium and sells nuclear fuel under its current name of Centrus Energy, gave Poneman a roughly 700 percent pay raise when it hired him as its chief executive officer on March 5. It will pay him roughly $1.5 million in salary and bonuses this year and up to $2 million starting in 2016, according to the company’s reports to the Securities and Exchange Commission. His salary at the DOE was $178,700 a year.
It’s common for federal officials to move from government to industry, expanding their contacts and influence in the former and their salary in the latter. But Poneman’s passage from government overseer to a company he financed with public funds has drawn unusually harsh and bipartisan scrutiny from lawmakers and watchdog groups.
It has also brought new attention to the department’s controversial, ongoing efforts to bail out a private firm with highly paid executives, which passed through a 2014 bankruptcy and still experiences huge losses. USEC was once government-run, but it was bought by investors for $1.9 billion in 1998, and they’ve been the beneficiaries of the stream of federal aid that Poneman helped arrange.
In interviews, Poneman and other Centrus officials said there is nothing inappropriate about his new job and that the company did not solicit him for its top position until several weeks after he left the Energy Department. “This thing came quite unexpectedly,” Poneman said, after he had already arranged a fellowship at Harvard’s Kennedy School of Government. He says that he will follow ethics laws that restrict his future dealings with the Energy Department.
Under those rules, Poneman is barred for a year from seeking federal action from DOE at meetings with DOE employees. In 2009, he took the Obama administration’s ethics pledge to extend that rule to two years.The rules also permanently bar Poneman from representing Centrus before DOE on contracts and grants he was “personally and substantially” involved in deciding.
Discussing Centrus' work with officials at a DOE-funded lab
But the rules primarily bar contacts between Poneman and DOE's direct employees. For a federal agency like DOE, which does an overwhelming proportion of its work through contractors, this restriction is not so limiting.
For example, Thom Mason, the director of Oak Ridge National Laboratory in Tennessee, which is operated for DOE by contractor UT-Battelle LLC, told the Center for Public Integrity he spoke to Poneman in late March — shortly after Poneman started at Centrus — to discuss the performance of the uranium enrichment machines that Centrus is developing under a $117 million subcontract with the lab, which gets about 80 percent of its budget from the Energy Department.
Asked if he felt that his discussion with Poneman raised any ethical issues, Mason said he felt it was “within the scope of the relationship we have with Centrus.” Mason said that while Poneman may be barred from contacting DOE officials, that prohibition does not apply to DOE's contractors. “I don’t think that there’s any conflict that I would be concerned about,” he said. DOE declined comment.
“He’s running a company now whose business is deeply intermingled with his work as a public official,” said Michael Smallberg, an analyst with the Project on Government Oversight, a government watchdog group. “At the very least it creates a perception that he was too cozy with a company that he should have been overseeing at an arms-length distance.”
Key lawmakers are also concerned about Poneman's new work. In March, Reps. Jason Chaffetz (R-Utah) and Rep. Cynthia Lummis (R-Wyo.), told Centrus officials in a letter that Poneman’s shift raised questions about whether he had complied with rules requiring that federal officials looking for private employment report their contacts with potential employers and recuse themselves from related decision-making. They noted that Poneman had been “substantially involved in business arrangements between the DOE and Centrus” when he was at the department.
Centrus spokesman Jeremy Derryberry confirmed in an email that Poneman "addressed" issues at the Energy Department that affected USEC, but he said Poneman did so to protect national security and to "advance the best interest of the American public." A DOE lawyer told House lawmakers in an April 30 letter that there is no “indication” that Poneman violated the department’s ethics rules.