Robert Anthony, an Oklahoma Corporation Commissioner, is a GOP public utility regulator. Anthony revealed in late 1992 that he had been cooperating in a federal bribery probe, secretly taping utility company representatives who broke laws prohibiting donations to regulators. The scandal led to a potentially explosive court case that could have implicated high-ranking Democrats, but was averted at the last minute by a company buyout involving Gene and Nora Lum.

Bribes | Mack McLarty | Creek Systems | Dynamic Energy Resources
Justice Department investigation |

Anthony: The Oklahoma Corporation Commission is this state's most powerful state agency. We regulate all of the oil and gas activity. We regulate the public utilities. And we regulate transportation in the form of trucking and railroads. So, of the approximately $70 billion dollar gross state product, we have direct involvement for at least $10 or $12 billion. And we have indirect impact probably on the majority of the state economic activity.

The agency is headed by three elected commissioners. ...[They] have a six year term, and they're elected statewide....[Prior] to my arrival in 1988, we had had 60 years without a single Republican [commissioner], and there had only been one Republican in the early statehood who had ever served.

Q: Were commission appointments the equivalent of party rewards?

Anthony: Well, if you characterize the commissioners [who] have served in recent decades, most of them had many years of service in the state Legislature. And they would come over here at an annual full-time salary, which was higher and would get their pension benefit up to the top. So they were definitely a part of the good old boys' system, and they were used to dealing with lawyers and lobbyists and the corporate elite...

Q: Who were the big utility players?

Anthony: ...We have two electric power companies that serve the vast majority of the state. For natural gas companies, there's two. Oklahoma Natural Gas and Arkla [Inc.] And then there was one telephone company that has most of the business, and that's Southwestern Bell. So, those five utilities are the main players in the state.

Q: If I looked at an overlay map of Oklahoma, I would see wells, I would see pipes, I would see highways almost of grids through which gas is sent out into individual houses. Is that basically it?

Anthony: There is a network of pipeline system literally covering the entire state of Oklahoma.

Q: How important is that to the state economy?

Anthony: Well, I think, natural gas is probably the cornerstone of the future of Oklahoma, and it has been of utmost importance during the last decade. We used to refer to the oil and gas business, in Oklahoma the proper reference today is "the gas and oil business." Natural gas is...increasing in production, and the price gives it the greatest dollar volume of production.

Q: What is Arkla?

Anthony: The name Arkla is Arkansas Louisiana. They also serve the state of Oklahoma in a major manner. So, it's a multi-state company....Their headquarters is in Arkansas, in Shreveport and Little Rock.

Q: Tell me about the first bribe you were offered as a Oklahoma Corporation Commissioner.

Anthony: There was a utility lawyer who actually represented three of the five biggest utilities in the state. And his business is to get things done at the Corporation Commission....I was elected commissioner and he wanted to establish a relationship, and I guess his pattern of doing that was to provide money....I can remember the first time he actually came into my office. He even said, "You know, sometimes I get money for the commissioners." He called it "walking around money."

He said, "I can get you $300 or $400 walking around money. I do that for the commissioners." That was kind of a shocking thing. From his earliest visit, too, he knew that I had a campaign deficit, and despite the fact that it was against the law, offered to get together a $10,000 contribution coming essentially in three components.

Q: Did you know when you started working here that this kind of stuff was probably going on?

Anthony: My first introduction to this entire episode was in about the last six weeks of my campaign....I was sent word that some people wanted to meet me. Well, I was running a campaign so I was happy to meet people interested.

So, I went over to Mr. [William] Anderson's office, and we had a nice chat. He's...an authority on utility regulation. We had a nice little chat, and he handed me an envelope, and I put it in my pocket. And I remember driving home, not at the first stop light, but at the second stop light, I opened up the envelope and there were 10 $100 dollar bills in it, with a little slip of paper in one person's handwriting that had five names written on it. Now, I was supposed to assume that that was five people [who] contributed $200 apiece, and that I didn't have to report it by name.

I told this story to a high school friend of mine who just happened to be the US Attorney at the time. And before I told him the name of the person, he said, "Was that Bill Anderson?" And I said, "Yeah, that's who that was." And And he said, "Well, Bob, we've been interested in his activities for a long period of time, but it's awfully difficult to get inside information." And I said, "If he continues to have dealings with me, I'll keep you posted."

So my high school friend arranged for me to meet him in his US Attorney's office, and there were two top FBI agents from the city who were there. And I agreed to keep them informed if activities continued.

And Mr. Anderson called, and he called again, and he wanted to establish a relationship. And eventually they got recording equipment put in my office, and he continued his activity.

Q: Tell me about the recording equipment. Where was it? How did you do it? Were you wired?

Anthony: Actually it's not quite that sensational. I sometimes had a little pocket recorder like the one you could buy at Radio Shack. Actually the FBI didn't really want me to explain all the equipment that they have. But it was traditional FBI recording equipment, and it was installed somewhere in the office.

Q: Would you recount for me a conversation you had with Mr. Anderson to make sure the transaction was clearly illegal?

Anthony: Sure, I remember the time he had 50 $100 dollar bills. And I said, "You know I grew up in the business world, and we counted money when it came in." And so he'd chuckle, and then I'd start counting it out, 1-2-3-4, and then it would get up to 45-46-47-48-49-50! And, uh, he had a funny little thing he'd like to say,..."Well, if there was one extra, I'd a' jumped up there and grabbed it." And we'd chuckle about that.

Then he'd go on and explain about what was expected for the money. The definition of bribery, out of Black's Law Dictionary, includes a quid pro quo, if he just gives me a gift that's not necessarily a bribe. But, if he does, like he did, say, "You know, these companies I represent, they expect to make a profit. They expect to be in business a long time. And we're not going to bother you every day, but someday there will be some officer of one of the companies I represent, and we'll need an appointment, and we'd expect for you to give us an appointment."

...Well, a certain amount of this is a wink and a nod, too. But, there was no doubt in our minds what was going on. Very clearly what was happening was people were giving me a large number of hundred dollar bills because they were buying access, and they were buying influence. And those words were even used in conversations that I had with utility executives.

Q: Who did Mr. Anderson represent?

Anthony: Mr. Anderson represented several utility clients, three of whom were some of the largest utilities doing business in the state: Southwestern Bell, Oklahoma Natural Gas and Arkla Gas Company.

Q: Did it ever come down to a specific moment when you had to sit in a room and make a deal with somebody?

Anthony: Well, there was another time that was a little more specific as to the arrangements. He gave me $5,000 in cash. And he wanted me to go to dinner with a group of his clients. He wanted me to meet with the particular person, and he wanted to protect his clients on a particular [telephone company] matter that was being regulated before the Commission at the time.

...Some characterize [this one case we had] as a $30 million utility vote. And that's the one where [Oklahoma Corporation] Commissioner [Robert] Hopkins was convicted of taking a bribe, and he's now in federal prison. On that particular case,...my vote was worth a little bit more.

Mr. Anderson had arranged to get me $15,000 in cash to be given to my administrative aide for him to buy a new car. Two days before the vote on that matter, he told me that he had $7,500 in a suitcase in the trunk of his car, and I could come by and pick that up...and I could use it for political purposes or for personal purposes.

[That] was a couple of days before the final vote on a $30 million utility rate case, [and he] was the attorney of record in our courtroom [who] represented Southwestern Bell.

Q: How does that compare to Arkla ?

Anthony: ...[During] the period of time that Arkla's senior vice-presidents, - two of them - were delivering cash and checks, that company had multi-million dollar cases before this commission involving major policy issues pertaining to natural gas utilities and specific rate cases involving millions and millions of dollars.

So to buy access and to buy influence, it was an important thing to them.

Q: You do not believe you were the first or only commissioner approached by Arkla?

Anthony: I know from personal knowledge that other transactions had occurred. My office [was] next to a commissioner [whom I overheard] on the phone saying he needed some walking around money for that afternoon.

I asked Mr. Anderson about it in a conversation a few days later, and by the look on his face, I know that...he was talking to the other commissioner.

The FBI did a Title 3 wire tap on Mr. Anderson's phone, and one night he was calling his law partner. And he said that Dick Moore, the senior vice president of Arkla, had delivered money by the tons to [another] commissioner...So I know that there was a lot of activity.

Q: Was Thomas F. "Mack' McLarty III, former White House Chief of Staff, gone from Arkla by the time you took office?

Anthony: No, no. At the time that five or six Arkla officers or attorneys illegally gave me cash and checks and we discussed the illegal nature of the transaction, Mack McLarty was chairman of the board and chief executive officer of Arkla.

Q: Any doubt in your mind that he knew about it?

Anthony: I can't say whether he knew about it or not. But there was in a federal criminal trial a Title 3 wire tap conversation that was played by the FBI agent who sponsored that exhibit....Bill Anderson explained to his law partner that he had met that day with Mack McLarty and with Milt Honea, the chairman and the president of Arkla.

And in that same conversation, Mr. Anderson acknowledged that he knew that the FBI investigation was active and that they were interviewing people. And Mr. Anderson was indicted for obstruction of justice based on that conversation, where he was trying to get himself and his law partner to have the same story and their story straight, and what parts of the story they were going to claim they didn't know anything about.

So there is circumstantial evidence of communication, but I wasn't there, and so I can't say what personal knowledge Mack McLarty had.

Q: What are the stakes?

Anthony: That's the irony of this whole business. You know, $10,000 and $15,000 bribes given in a $30 million telephone utility rate case -- that's a pretty small price to pay to influence the outcome of a case like that. Arkla had rate case decisions that were being made in the orders of magnitude of tens of millions of dollars.

Q: How much do you figure that you received in bribes over the period of time that you were working with the FBI?

Anthony: Well, there were some offers that we chose not to collect on, because we were not satisfied that the full arrangement was specified in a clear enough manner for the jury to be able to pick up on it. So we weren't going to finalize some of those transactions.

But anyway, during my service of being a commissioner, I received $10,000 to $20,000 [in cash]...and had offers of another $5,000 to $15,000 on top of that.

Q: And this was over how many years?

Anthony: Well, the actual time when the money was changing hands was mostly in the first year-and-a-half [when] I was commissioner. I continued to assist the FBI in these recordings because Mr. Anderson and I, frankly, got to be rather close, and he started to confide in me and explain to me, if not brag to me, about some of the arrangements they had made...with Commissioner Hopkins...

Q: Let's discuss Creek Systems now.

Anthony: ...[It's] improper for an attorney to try to influence a commissioner or a judge outside the court room. You argue your case during the day time, and then you go to the commissioner at night, who you've been giving to illegally, and try and tell him what the outcome of the case would be.

That was improper....So after our investigation had proceeded for some period of time, I thought it was necessary, and my official duty, to call the attorneys and the parties of these cases into my court room, and advise them that the decisions they had received were not based on fairness and justice, but they were based upon influence from outside the court room...

[At] that time, I had never met the people from Creek Systems. But I knew that they were being abused and that their attorneys had argued that they were in a financially difficult time, and they were about to go bankrupt.

...I notified them of the improper conduct and told them officially, as a court announcement, that they should pursue their remedies. Within 30 days, they filed a $40 million lawsuit in federal court against Bill Anderson for having violated their rights.

Q: Can you give me a 25-cent description of the Creek Systems controversy?

Anthony: ...Creek Systems was a gas gathering system, and they had an arrangement to sell gas to Oklahoma Natural Gas under a contract. I believe it is a 15-year contract and 12 of the years had gone by. But then ONG contested the terms of the contract and came to the commission to get us to make a ruling to justify the actions that they intended to take...

[It] was worth a lot of money to Creek Systems, which in some terms was a small company.

Q: Around this time that you stand up in a public commission meeting and announce that you have been taking bribes and working with the FBI. I would imagine there was a thunder clap around the building.

Anthony: It caught quite a bit of attention. It was front page coverage. I know one of the TV stations called it a blockbuster, and yes, it probably received enormous media attention. And frankly, I didn't think it really should because there [were] other public disclosures that the FBI had been investigating. They had been issuing subpoenas. They had been calling witnesses to the grand jury. That was in the newspaper.

...I only added one bit of information, in my opinion. That was, I said, I, Commissioner Anthony, have been taking money, and I want people to know ....I was working as a cooperating witness, assisting the FBI during this entire process. But others did not wish to be public spokesmen. Those [who] were in trouble certainly didn't want to talk about it. They wanted to minimize it, and so I guess I created the spark upon which the media attention grew.

Q: Was Mr. Anderson in the courtroom?

Anthony: ...He was not present. And he hasn't called me since that day.

...The court room was full. And it was full of the parties to these cases, and their lawyers wondering just how much I knew and how much I was going to say....Frankly, I think they should have figured out a long time ago that I was the insider assisting the FBI. But maybe they didn't....I guess they thought I really was a crook and were comfortable with that.

...[It] was a tough situation for me to handle. During this whole period of time, the FBI and the Justice Department, they had their business and I had my business. They are not my advisors, they're not my attorneys. I tried to pursue my constitutional duties to my state agency and assist them at the same time.

So to a little extent I was on my own with whatever advice I could get from one or two attorneys in this agency. I read an announcement that pertained to the same case that Commissioner Hopkins went to prison [for] on the telephone rate case, and I read an announcement regarding the Creek Systems/Gage Corporation. And I was chairman, and we went right on to the next docket item.

Okay, I do remember that a Southwestern Bell attorney jumped up and asked if he could make a statement, and I said, "No, this was posted as an announcement from the chairman, and there will be no other comments received at this time. You're entitled to do what I asked you to do to pursue your remedies, and you can file motions or applications, as you see fit, and we'll deal with those in the proper fashion."

Q: Why was your action so significant for those who had paid bribes?

Anthony: ...Other Southwestern Bell executives and employees had already been subpoenaed and appeared that summer at the grand jury. So they knew an investigation was going on....

Now, if there was a big gasp, it was, "Oh, my gosh, the guy we gave the money to was working with the FBI. Oh, my gosh, it was all probably recorded." So then they knew that the...improper conduct that they'd been involved in was much more serious because probably hard evidence existed of what went on.

And there was hard evidence. There [were] recorded conversations, and the $100 dollar bills were in the FBI's evidence vault.

Q: And for companies like Creek Systems?

Anthony: Well, Creek Systems knew that rulings had not gone their way. They didn't probably know why. And then when I, as a commissioner and a judge in their cases, notified them that improper conduct had occurred, then they could go into motion. They could file law suits, they could have their attorneys do discovery and ask questions.

They did ask me to give them more information, and I gave them one affidavit within a few weeks' period of time. And I gave them a second affidavit with a certain number of documents and exhibits within another few weeks. And a lot of that was the basis upon which they went forward with their $40 million lawsuit.

Q: And by going forward with a lawsuit like that, you are also posing the potential threat of discovering all kinds of horrible things that went on that have not yet come to light. Is that right?

Anthony: That's right.....As it ended up, there was a settlement of their lawsuit. But the threat that they had to give them leverage was that they could make everything go public. They could do discovery and have depositions. ...They could expose the corruption that had existed in this state [for 30 years].

Q: And, I suppose, if you're Mack McLarty, and you're sitting in Arkansas, and your best friend has aspirations to be President of the United States, and you have your eye on an office there in the West Wing somewhere, you're not real happy about the idea of a potential discovery lawsuit into all your lawyers' business.

Anthony: Even if Mack McLarty did not personally participate in or did not personally know of the illegal conduct of his senior officers, it certainly would have been a skeleton in his closet...and so he had a great motive to do damage control.

Q: What happens next?

Anthony: Well, I guess you'd say that all heck broke loose. Creek System had a civil suit [for $40 million in federal court]. In addition to that, these companies accused me of being biased and unfit to be a commissioner because I had assisted law enforcement. Now, I think that's almost a joke.

...So they filed actions at the Supreme Court, and it took up a lot of time and effort to defend those actions. They asked me to step down from my position and excuse myself or disqualify myself, and I said I would not do that.

...I said, okay, if they want to bring this up, I call for an unprecedented evidentiary hearing [before] the Supreme Court. They granted my motion. They got Harvard-educated Judge Meyers, one of our senior judges who had just retired, to take on this case for the Supreme Court as a special master and conduct the evidentiary hearing.

...That would have let it all hang out. Judge Meyers is a no nonsense judge. He had postponed that trial twice, and then he said we will go to trial. And the day before [his final deadline], Creek Systems ended up having a settlement of their case by virtue of this Dynamic Energy Resources coming in and buying their company and buying the rights to their lawsuit.

Q: What would have occurred if the case was heard?

Anthony:....We're talking about a 30-year history of bribery and corruption and wrong doing in the State of Oklahoma. And there's a lot of people [who] couldn't afford to have any of that story told.

Q: Had you ever heard of the people who formed Dynamic Energy Resources and purchased Creek Systems?

Anthony: ...What did I know about Dynamic? Not very much at the time. What do I know now? Dynamic Energy Resources was a start-up company that had no experience in the natural gas business. They had no reserves, and they end up getting a contract to sell enormous volumes of natural gas that they don't have over a 10-year period of time, and their biggest claim to fame seems to be their political connections.

And I know there were other legitimate gas producers in Oklahoma that were talking to ONG about that business, and they didn't get the contracts. And even one of them told me it was explained to him that somebody else had better political connections.

Well, now we find out that the political connections include [late Commerce Secretary Ronald H.] Brown, his son, people [who] are involved in national political fund raising activities, and so the whole transaction and who the people are is very suspicious

Q: Did Dynamic Energy Resources get what you would call a "sweetheart deal"?

Anthony: ONG had every reason in the world to hope that those civil suits would stop. They couldn't afford the embarrassment of having the history of improper activity come out in public. Arkla, who had used Bill Anderson and his services since 1969, could not afford to have everything be known. Arkla gave Bill Anderson, who was in about his 70s at this period of time, an arrangement to pay him $5,000 a month for the rest of his life.

In the bankruptcy proceeding, [Creek Systems'] physical assets [were worth about] $600,000. So, here you have a company [whose] assets are worth less than $1 million, and somebody comes in and wants to pay them $9 million for it....

Q: Describe that transaction.

Anthony: ...Dynamic was a startup company that had no capital. Nora Lum started with a 70% interest and didn't invest a dime. [W.] Stuart Price and his wife got a 30% interest and didn't invest a dime. The only thing they literally had was this lucrative gas contract given to them by ONG, which they turned around and...pre-sold before the closing to ANG for $7.5 million. And a few months later, they sold the other half of the contract to Enogex for $11.25 million.

...Now, normally people get paid something or derive some profit or fee because they performed a service. They didn't perform any service....They fronted a transaction.

Q: For whom?

Anthony: Well, the beneficiaries of the transaction were the people who wanted these lawsuits and the discovery and the public disclosure go away: ONG and Arkla. And there was some profiteering involved.

Now, what Nora Lum did with her money, her 70% interest, I don't know all of it, I know some of it. She gave Michael Brown, [Ron] Brown's son, 5%. Well, they made a $10 million dollar profit in about six months period of time, so 5% is a half million dollars, and that doesn't count the $100,000 fee [he received] and the other $60,000 and the golf club memberships and all of that.

...But [it] doesn't stop there. There were other employees, and former employees, of the Commerce Department that came and got put on the payroll or the board of directors at Dynamic Energy Resources. Many of them received a 1% shareholder interest. Well, once again, 1% of $10 million is $100,000. That's not a bad transaction.

Q: Smelly deal?

Anthony: This deal does not pass the smell test....

Q: What else made you wonder about this deal?

Anthony: ...[Another] aspect of this is...that $4.6 million was wired into a small bank in Norman, Oklahoma on the day of the closing, and it came from some entity in Arkansas. Remember this too, the Bruce Lindsey law firm and John Tisdale, represented Dynamic at the closing.

So, from my standpoint as a little old Oklahoma utility regulator is what's going on here? We've got this startup gas company that has no gas experience. They got the son of the Secretary of Commerce. They have Bruce Lindsey's involvement, a long term friend and fellow attorney with Bill Clinton. They have other Arkansas and White House affiliated people, and they've got people involved in fundraising at the Democratic National Committee.

And these people are coming in to Tulsa, Oklahoma, and I'm wondering what's going on.

Q: Is it fair to say you've never seen anything like this?

Anthony: ...[We're] talking about a $10 to $20 million deal. This is a large amount of money. This isn't like a $10,000, $100,000 campaign contribution. This is profiteering at a very high dollar amount.

Q: We talked a lot about the civil case and what happened there. What happened on the criminal side?

Anthony: ...Mr. Anderson, [Hopkins]... and a former state Senator were indicted for obstruction of justice and for the bribery counts. The whole US Attorney's office in Oklahoma City was removed from the criminal trial a few months before we were to go to trial, and that had a disruptive effect.

...You know, Mr. Anderson just delivered the money. He didn't do it for his own benefit. He was representing clients that had multi-million dollar cases before our Commission. What about them?

Q: Any question in your mind that there was some heavy duty Justice Department-style politics being played with the US Attorney's Office here?

Anthony: I have to wonder if the lack of an outcome to some of these criminal matters was influenced from the White House. You had Mack McLarty who had an interest in hoping these things would all go away. You had the Clintons come into office, and immediately ask for the resignation of every US Attorney across the United States, [which] had the effect of removing the US Attorney in Oklahoma at that time.

And you had Webster Hubbell who went over to the Justice Department and was, in effect, running things even before, and maybe a little bit after Janet Reno was there. So, did Mack McLarty have an opportunity to tell his Arkansas friend, Webster Hubbell, that it sure would be nice if things kind of died down in Oklahoma? I don't know. I just know that some of the higher ups, even some of them who pled the Fifth Amendment, never got indicted or prosecuted.

Q: Why should people in the rest of America care about what happened here in Oklahoma?

Anthony: Well, I think that there's something particularly deplorable about public corruption. Not only is it illegal activity and all of us should be opposed as good citizens to criminal activity, but it erodes the confidence of the people of America in democracy.

Q: Maybe Nora Lum just got lucky.

Anthony: ...[You] have a sophisticated natural gas utility, and you have two of the largest producers of natural gas and transporters of gas in the state of Oklahoma -- sophisticated people on both sides. What do they need a middleman named Nora Lum [for]? She didn't perform any service that they couldn't have done on their own and saved the $19 million dollars.

...I think she was there because she fronted a transaction, and because somebody wanted to do some multi-million dollar profiteering along the way....She fronted a transaction in the name of Dynamic Energy Resources that benefited [Arkla and ONG]...and that benefited Mack McLarty and helped him deal with the skeletons in his closet...

Q: Where did that $19 million go?

ANTHONY: The $19 million of the Dynamic transaction, $9 million of it went to purchase Creek Systems, and to give the owners of Creek Systems some money so they'd drop their lawsuits and sign confidentiality agreements.

The other $10 million was a profit. And so if you owned 5% of the stock, like Ron Brown's son did, you made 5% of $10 million; that's $500,000. And Nora Lum, who started with 70% personally cleared $4, or $5 or $6 million dollars on the transaction. Now, she was giving it away to people associated with the Commerce Department, but she had plenty left over for herself.