the fixers
Interview

Ronald G. Miller

Ronald Miller is a former co-owner of Creek Systems/Gage Corp., an Oklahoma natural gas company that alleged discrimination by corrupt utility regulators. A court case that could have proved damaging to high-ranking Democrats was averted at the last minute when the Lums helped to purchase Gage Corp. and drop the lawsuit.

Robert Anthony | Sale of Creek | Gene and Nora Lum | Ron Brown
John Tisdale | Dynamic Energy Resources | federal investigation


Q: Tell me about the development of Creek Systems/Gage Corp.

Miller: ...[In] the late 1970's, we had an opportunity to acquire a gas pipeline that was owned by Oklahoma Natural Gas, and they wanted to sell it...[We] had a contract that was a precondition with ONG that stated they wouldn't sell us the pipeline unless we entered into a contract with them. So, they provided us with a 15-year contract for a stipulated volume on a daily basis.

Q: What was the company's potential worth at that time?

Miller: Well, ... we probably would have been earning in the neighborhood of $2.5 to $3.5 million, some place in that area, if everything had been copascetic....

..[One] of the benefits of being in the gas gathering and pipeline industry is that it doesn't have the gigantic upward potential as being in the expiration business. You could be in the expiration business and go out and put your money in one well. And if you were successful, and the gods of oil and gas shined on you with a big smile, you could make a lot of money on that. Whereas with the gas pipeline, it was more predictable...

Q: As long as ONG was willing to honor their agreement with you?

Miller: That's correct.

Q: But they didn't.

Miller: That's also correct.

Q: What happened?

Miller: The first time that we had an inclination of a problem with ONG was in August of 1989, and out of the blue they curtailed our production for a couple of days.

...[We] were cut down to two million [from 18 million] per day. And we had ...employees and the situation of having to pay all of the field operations and the equipment that's used in gas pipelines is costly....

So, it was a terrible shock, and we made a phone call and suggested that we would like to come over and meet with them, which we did. And at that point our thoughts were to try to prevail upon them to realize that we had entered into the contract that they had demanded that we take, and that they had designed the price mechanism, and they had also designed the volumes that we were to supply to them.

....A couple of days after the meeting they turned the gas back on again, and it looked like maybe we had achieved that. However, a couple of months later, they shut it off again. And we went through the same situation.

Then, in December of 1989, we received a letter stating that through the winter, which is always the best part of the year as far as gas sales, that they were going to cut back our production of what they would buy from us down to approximately one-fourth.

...[The] reason that they used for breaching the contract was a set of rules - [called the Priority Rule] - that had been established by the [Oklahoma Corporation Commission] in the mid-1980's.

...[The] Priority Rule basically prioritized natural gas in the state of Oklahoma and categorized it from Priority One, which was the highest level of deliverability, down to Priority Five, which was the lowest level of deliverability or acceptance to buy. Our gas fell in that Priority Two and Priority Three, ...[but] they invoked the Priority rules and cut back on Priority Two, which was the majority of our gas.

Q: At the time what did you think was really going on?

Miller: They're trying to put us out of business.

...[We] filed a civil action in the State Civil Court. And the utility argued that the civil court really wasn't the arena for that case to be tried, and that we really should take our actions to the Corporation Commission, because that was who regulated the utilities in the state of Oklahoma.

Q: And what happened there in short?

Miller: In short? Probably one of the most eye-opening experiences in my ...business career, and I'm 57 years old....

...So we go to the [Oklahoma] Corporation Commission to plead our cases against ONG on the breach of the contract and through the first year, which was 1990, we made many appearances, and every time we would make an appearance, to me it was sort of obvious that the rulings we were getting were bizarre. And I went to our attorneys, ... and told them that I thought there was some hanky panky going on. And they basically tried to calm me down and tell me that it couldn't possibly be....

...The senior administrative law judge who heard our case...came out with a findings...which basically agreed with everything we had purported in our hearing. In fact, at the end of his findings, it stated that the utilities should go back and handle the implementation of the priority rules correctly. At that point we thought, "My gosh, we're right. Now we can see some justice, and everything will be great."

That same findings that we presented in the hearing to the administrative law judge then went back to the three commissioners. And the three commissioners all voted, two to one, against it. And there we were again.

So the only thing that we could do at that time was to appeal that ruling from the Commissioners to the State Supreme Court. So that would be in approximately September or October of 1990...It languished there for many years, but in the meantime, ...we continued to have more actions at the Corporation Commission.

...[Approximately] in about June of '92, maybe May of '92, we received a call from the Justice Department, that asked if I would be willing to sit down either formally or informally with the FBI. So I was perfectly happy to do it informally, because-...we were trying to find truth and justice. Okay? So we met with them and went over everything. And the questions that were being asked were mainly pertaining to rulings that we had had at the Corporation Commission.

Q: You were at the meeting when Commissioner Robert Anthony made his announcement. What happened?

Miller:[O]ur attorneys received a phone call from the Corporation Commission requesting that they come up to the Commission the next morning and bring their clients with them, meaning the [Creek/Gage] Corporation. And since I ran Gage, I was the one [who] would be attending it.

...There were television cameras, and there was a room full of people. And we had never seen that before in any of the hearings that we'd had....[Nobody] seemed to know why everybody was there. Well, when they convened the session, Commissioner Anthony came out and basically read a statement stating that he had received bribes and had turned them over to the FBI.

And as he walked through this, he mentioned the cases that...these pertained to. And one was the Southwestern Bell case and the other one was us....[Needless] to say, it was a shock....

Q: What are you thinking at this moment?

Miller: It was sort of like...the line from "Apocalypse Now": "I love the smell of napalm in the morning." ...It was an exhilarating thrill of realizing that we had basically been right in what we had assumed, and that our intelligence and our knowledge was correct...

But then it sort of turned back to the same old doldrums that we'd been battling all the time up to that [point] because we had to figure out how...the effects of that knowledge...affected these rulings that we'd had over these years.

Q: So what did you eventually do?

Miller: ...[We] decided...that we had a very strong violation of civil rights case, which is a federal offense, against [public utility attorney] William L. Anderson.

So we filed a violation of civil rights suit against William Anderson in Federal Court, in the Western District of Oklahoma Federal Court....

...[When] Judge Meyers was appointed, then we had the right to go ahead and start subpoenaing people and taking depositions.

...[We] subpoenaed Corporation Commissioners, past and present. We subpoenaed attorneys and corporate officers, and all kinds of people. There were about 28 or 35, something like that, different depositions.

One of them being William Anderson, which one of the most incredible depositions I've ever seen in my life. He was asked 287 questions, and 287 times he took the Fifth. It was just incredible....And as this thing was going through, more and more pieces would start materializing.

...I think that maybe that the utility may have realized that there was a train coming down the track, and that this train didn't have its headlights on. And if they didn't get off the track, that they may get caught up in that collision because when I go back and think about the various depositions, we were getting very, very, very close to being able to lay out the full puzzle.

Q: Where did the idea to sell Creek/Gage come from?

Miller: Well, it was something that we had to think about because we were incurring huge bills. Our cash flow had been basically eliminated. We were keeping things together with duct tape and baling wire. It was very difficult.

...[We] had talked with a couple of companies about maybe combining ourselves with them. One of them was another company that had some problems with ONG, so we thought that this might be a possibility. And then out of the blue, my ex-partner came to me and said that he had been approached....

Q: What does he tell you?

Miller: He called me up one day about maybe two weeks after Commissioner Anthony had made his October 2nd announcement and said that he'd had a call from a friend in California [who] had overheard a conversation at a Democratic National Committee fundraising function [and]...the name Gage and Creek Systems mentioned and that he,...my ex-partner, was going to be contacted by some people to try to put the thing to bed.

Q: Where in California?

Miller: Supposedly, it was in Torrance, California.

I took his statement [for] fact...because I'd know my partner for about 40 years, and we'd been business partners for the better part of 20, and I just figured that what he was telling me was the truth....[He] made it very clear to me, he didn't care what happened. He just wanted to sell.

Q: What did you think of the idea that somebody was talking about Gage and Creek at a DNC party in Torrance, California?

Miller: ...It could involve some of the things that were coming out in the various investigations that were taking place in Oklahoma....Arkla was being mentioned. Southwestern Bell was being mentioned.

Q: Why would Arkla be worried?

Miller: ...[We] found out that William Anderson, who represented ONG, had also represented Arkla for years. Almost as long as he represented ONG.

Q: Arkla has this certain Democratic connection, doesn't it?

Miller: Yes, it does.

...[In] 1992, I believe that [Mack] McLarty was still president of Arkla or Chairman of the Board of Arkla. And then he subsequently became Chief of Staff of the White House...

Q: Does your ex-partner hear from someone about the possible sale of Creek/Gage?

Miller: He just said that he'd been approached by a woman. And I said, "What's her name?" He goes, "I don't know."... That didn't compute. I mean, that didn't make sense. But that was what he was telling me, so I went along with what he said.

Q: He's approached by a woman he doesn't know to buy a company he no longer wants? What do you make of that?

Miller: At the time, I figured it was probably a result of the potential political card -- ...[the] involvement of companies like ARKLA [and] Oklahoma Natural Gas that are democratic in their political persuasion and the fact that they shared the same bag man, and that the two states were very democratic as far as their political persuasions.

...About a week or so later, [my ex-partner] talked to me and he said that he had met with [the potential buyers]. And...I said, "Well, great, who are they?" And he goes, "I can't tell you the name."

...He then informs me that he's going to be meeting with them and talking with them, and that they have expressed an interest in trying to acquire the assets of Gage and Creek Systems. And that they also would want to acquire the lawsuits.

Q: What did you figure you'd get for the company?

Miller: We felt in the neighborhood of $20 to $23 million.....

Q: So here's this phantom buyer who's served up on a silver platter by the Democrats in Torrance, California, an Asian industrial neighborhood....Did that mean anything to you?

Miller: No. Not at that time, because, see, when I would ask who these meetings were with, I wasn't being told. I didn't even know the name until the early part of 1993.

Q: And the name was--

Miller: Nora Lum. Nora and Gene Lum.

Q: How was it explained to you who they were?

Miller: Nothing was really ever explained at that time. Because, see, the first contact as I was made aware was like a couple of weeks towards the mid part of October of 1992. I then heard [in]November of 1992 that it was a woman. And that's what my ex-partner said.

And then he said it's a woman, and her husband is a lawyer. And that they worked for the DNC. But I didn't know the name or know anything about it. And any time he would discuss it with me would be "the lady" or "the woman." I mean, that's how he referred to it.

And when I would ask why I couldn't sit in on the meetings, I was informed that I was too adversarial....I feel like a village idiot as I sit here and say this today. I mean, this is a man that I had known since we were in junior high. And this is a man that has a son that's within a month of the same age as my son, and our sons were acquaintances and friends....

Q: Now, the President has been elected by that time, too. And Mack McLarty, within a month or so, is named as the nominee for Chief of Staff.

Miller: Right. And that would put it in the January of 1993 area. At that time, I still didn't know their name. I did know that they were Asian. I knew it was a husband and wife, and that his contacts were mainly with the wife....It wasn't until probably the month after that, that I was finally given the name. And it wasn't until probably around May or June of 1993 that I just insisted that if I didn't meet them that I wasn't going to go ahead with anything.

Q: Did you ever ask whether they were oil and gas people?

Miller: I did ask that, and I was informed that this wasn't the case.

Q: Did that surprise you?

Miller: Yeah,...I've had a lot of background in the oil and gas business because I was in the investment banking area that dealt with oil and gas companies. But these people had had no knowledge or experience in the oil and gas business.

Q: Does the name Ron Brown come up in any of the discussions?

Miller: Yeah....

Well, that was always alluded to as her power base. And they weren't very subtle about that....It was mentioned quite a lot, quite often.

Q: What was?

Miller: That they were very close friends and very involved with Ron Brown.

Q: What were his Oklahoma ties?

Miller: He was very close with our ex-governor.

Q: Was it your impression that he was getting in this business with the Lums, or he was just friends with them?

Miller: Well, later on, probably in the early part of 1993, I was told that he would probably be an investor. But then I was subsequently told that no, he wouldn't be because he wanted three times his money.

Q: Who told you this?

Miller: I believe it was my ex-partner.

Q: Now what?

Miller: The next thing I know is there's lawyers [who] are representing the potential buyers. And they're putting together draft agreements, and I'm seeing a draft agreement every so often.

...The price at the very beginning had..started... in the$23.5 million range, which is the same area that we had had discussions with ONG on, and it started to fall....And it seemed like every time that my ex-partner would meet with them, it would fall a little bit further. And I made a comment to him one time. I asked if he wanted to stop negotiating because we couldn't afford to watch the price drop any further.

He didn't take that well....It got down to around the $10 million range, which was less than half of what we'd originally started at.

Q: At what point did you finally meet Gene and Nora?

Miller: I believe it was probably around May 1993. I told my ex-partner that I refused to go any further, and that [it] was going to take two to tango. In other words, he owned as much of Gage and Creek Systems as I did. And that if I didn't meet them,...I wasn't going to go along with it.

Q: Describe Gene and Nora.

Miller:[S]he was very friendly to me, and she was very cordial and congenial. Her husband was a little bit more withdrawn, sort of didn't say very much, sort of sat there. She did a lot of the talking. And I guess as I drove out of the parking lot, my thoughts were that she seemed to be quite bright, and she was friendly.

Q: Did you have a sense that Nora and Gene knew what they were doing?

Miller: No. I really didn't, because they would spend a lot of time asking questions that would be basic. And even though they were with Jim, my ex-partner, it was like he hadn't given them any education on it.

Q: Did you have any sense that they really intended to run a company?

Miller: Yes, because they were very interested in knowing which of Gage's employees would stay, and they wanted to spend time and meet them.

Q: And did they succeed in doing that?

Miller: Yes. They kept all the field people, and they kept the two gas buyers, and they kept the comptroller.

Q: You met them again in September 1993. Who was there?

Miller: As I recall, it was Nora and Gene Lum. I believe [W.] Stuart Price was at that meeting. That was the first time I met Stuart Price.

Q: And their new counsel?

Miller: I believe he came over with them at that time. If not that meeting, it was the very next one.

Q: And who was he?

Miller: His name was John Tisdale.

Q: Well, what did you know about John Tisdale?

Miller: Well, at the time I was introduced to him, not very much. But within a matter of a couple of hours, I made a few phone calls and had my eyes opened up a little bit....He is [presidential counselor] Bruce Lindsey's law partner, and represents the President and his wife in Arkansas in their legal matters.

Q: What did you make of that?

Miller: I thought it was sort of interesting. I mean, I'm not of that political persuasion, but it was fun to watch and listen....When they started...coming over to the office, I was told that I didn't have to be in the conference room. So I would walk by the conference room, and if they were taking a break, sometimes I'd overhear things.

And one time they were discussing the situation involving the Travelgate situation with the Thomasons and what was going on and all of the problems that were happening there and how wrong that was, and they should have done it differently.

...And then later on in the negotiation time frame, I walked by, and there was a discussion going on between Stuart Price and Nora Lum and John Tisdale, and they were trying to determine which plane they were going to fly on going up to the Asian Economic Council meeting in, I think it was Seattle, Washington....[They] all wanted to go with Airforce One, but it looked like they weren't going to be able to....

Q: Is there any question on your part that they were making it up for your benefit, this talk of the President and flying on Airforce One?

Miller: No. ...When they'd sit down and meet with our employees, practically the first thing that would come out of their mouth is, "We're from Washington, and we're here to help."...My secretary came to me and said, "Ron, we're getting faxes from the White House."

...They were coming to our office, and they were being picked up mainly by John Tisdale....Also phone calls. I think they had a couple of phone calls, too.

Q: You don't have any idea who the calls were from or the faxes were from?

Miller: No. No.

Q: If you're Mack McLarty, I would assume you would want to get this deal done. And if you're the Lums, you might want to get this deal done. So it gets done?

Miller: Right.

Q: How much?

Miller: $10 million.

Q: Whose money was it?

Miller: ...I'm not sure.

...I wasn't invited into the closing room....I only was invited in to sign one document, and then I spent the rest of the time out in the reception area. It was sort of a funny closing. I've been at a lot of closings. ....It was like they didn't act really that happy. There was nobody that acted that happy about it except maybe our attorneys did.

...[The] Lums ... sort of acted more like in shock. My ex-partner was very quiet...

Q: What do you mean the Lums were in shock?

Miller: ...They didn't say very much, and they sort of acted like, "Oh my gosh, what do we do next?"....

...After we closed, part of my self-imposed therapy was to put the whole thing aside and really not spend any time with it. Because as far as I was concerned, we had received our documents....We were able to take care of a lot of Gage's debts and open accounts. We were able to disperse some of the funds to my ex-partner and myself as the shareholders.

And I was looking at another venture and was really spending my time addressing that. And basically for probably a year after that, I really didn't think anything about it because the payments came in every month like they were supposed to. I didn't have to talk to any of them. I mean, I never had a call from the Lums, so I never met them again after that....Stuart Price wasn't coming over for lunch or anything like that....

Q: What happened when Dynamic Energy Resources took over?

Miller: Well, up until 1995 I hadn't really spent any time keeping up with them because I had no reason to. But when the payments stopped, I started looking into it a little bit more, and I found out that they had taken this contract that they had been given, and they had sold it for the better part of $19 million. And it was incredible. I mean, that was a real shock.

That was another one of those areas where I felt like I'd really been had at that point. In other words, if they were willing to give people [who] weren't even from the industry a contract that generated $19 million in value that...had the potential over a 10-year period of making $60 million..., why would they give them that contract at a price that was much higher than what our contract was? And our contract only had a year and a half to go...

Q: It sounds like a sweetheart deal.

Miller: Yes. Actually, ....there was subsequently a lawsuit in Tulsa between the Lums and the Prices, and that was sort of like nuclear warfare in their own tent. They were just throwing stuff out on the table that was incredible. And that was when I started going, "Wow,"... because I didn't know about the contract being subdivided and sold. And then I realized that they'd sold off the compressors, and they basically were going to sell off the pipeline.

And then...I started looking at the transcript and hearing of the expenses that...these people were taking out of the company, and it was obvious that they weren't trying to do an ongoing operation. That they were really looking at a very short term liquidation, and that was all they were doing.

Q: Where did the money go?

Miller: ....They donated money to political campaigns, they donated money to, I believe, Senator [Edward] Kennedy's campaign in Massachusetts. They donated a lot of money to Stuart Price's campaign. They were leasing airplanes for campaigns. They were flying all over the world. They were doing all kinds of weird things, and they were taking huge reimbursements of expenses...I couldn't have justified it in any business I've ever had.

Q: What did you think of the involvement of Michael Brown, the son of late Commerce Secretary Ronald H. Brown?

Miller: Oh, that was the other thing that really shocked me. I had heard his father's name mentioned early on before the deal closed. And then when I went through the documents, after the lawsuit was filed in Tulsa, and realized that he was involved in it,...that really shocked me.

Q: As far as you know, does Michael Brown have expertise in the oil and gas business?

Miller: Not that I'm aware of. I don't think he does at all.

Q: So, why would they have hired him?

Miller: I guess it's great access, isn't it, one might say. Sure looks that way.

Q: Have you been contacted by federal law enforcement officials as a result of any of these goings-on?

Miller: Yes.

Q: Who?

Miller: Yeah, Independent Counsel.

Q: What do they want to know?

Miller: Probably the same things that I'd like to know. I think they're trying to put their hands on the weirdness of the whole thing.....There are so many things that just don't make sense....

Q: FBI?

Miller: Yes.

Q: Was the FBI coming around before Ron Brown's death and asking any questions about his involvement?

Miller: Yes.

Q: Asking questions about the loans?

Miller: I believe so, yes.

Q: And after Ron Brown's death?

Miller: Yes.

Q: So, from what you can tell, this is still very much an active investigation by the federal government?

Miller: It seems to be....

Q: Is what happened here on the same page with Charles Trie, John Huang..... Is it bigger?

Miller: ....It's political hustling. It's [returning] a favor. It can be all kinds of things. I don't think that you can look at one thing and say it's one particular dish on the smorgasbord.

Q: Is it important?

Miller: ...I think that people in the government have to become accountable....I think that access is the name of the game. I think it's more access than anything else. I think that the access then leads to money, and money seems to be thoroughly the root of all evil, and it seems to be the common thread that runs through all of these stories that we hear about. That part is a little depressing.

Q: Where do the Lums fit in?

Miller: I don't think that there's any question that they had access, and that they utilized the power bases that they had available for them. I can't say that I know which power bases they all are. I think that there's a few that are obvious that have been utilized.

Q: For example?

Miller: Well, why would Ron Brown care about a gas gathering company in Norman, Oklahoma? I can't think of any reason.

Q: What do you chalk it up to?

Miller: Greed, power. Power and greed, that's probably the best way to describe it....

[END]

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