JACKSONVILLE, Fla. – Outside consultants hired by JEA as the city-owned utility explored privatization in 2019 provided insight into the scuttled attempt to sell the utility, during testimony at a pre-trial hearing for former JEA executives Aaron Zahn and Ryan Wannemacher.
Zahn, a former CEO of the utility, and Wannemacher, his former chief financial officer, were indicted in March 2022 on federal charges of conspiracy and wire fraud, in connection with a proposed bonus plan that prosecutors say could have paid out millions of dollars if the utility were sold. Both have pleaded not guilty, and their trial is scheduled to start February 20.
Wednesday, prosecutors called some of the witnesses they will be calling at trial, as part of a process to determine whether any of their testimony was impacted by statements that Zahn and Wannemacher gave to city attorneys in January 2020. At that time, city attorneys were investigating whether Zahn could be fired with cause, and as the two were required to sit for the interviews, their statements can’t be used against them in a criminal case. During the hearing, attorneys had a chance to ask about their exposure to those statements, and whether there was any effect on their testimony. A similar hearing was held with other witnesses last Thursday. Together, the two hearings give a glimpse at how prosecutors will make their case to a jury next month.
In the months leading up to the July 2019 decision to invite companies to bid on JEA, the utility was working with consultants for strategic planning and long-term incentive plans, and engaging with outside attorneys to advise on similar issues. Some of those consultants testified during Wednesday’s hearing. David Wathen, of Willis Towers Watson, described the firm’s work with JEA in developing a framework for a long-term incentive plan. At one point during his testimony, prosecutors showed a document that was an appendix to a planning document for the proposed compensation program. While the appendix appeared to be the work of Willis Towers Watson, Wathen testified that after they learned about the document from media reports, they recognized it was not the report they had delivered to the utility. He stated that at one point, the firm had provided JEA an editable version of a slide presentation used in their work.
During its strategic planning process, JEA worked with consulting firm McKinsey & Company. One of that firm’s senior partners, Anton Derkach, testified how he started working with JEA on strategic planning in 2018, detailing initial meetings, their workflow with the utility, and how they developed the baseline scenario. Derkach was also at the June 25, 2019 JEA board meeting, where the board was told that more than a quarter of the utility’s workforce may need to be cut, and the utility was portrayed as being in a “death spiral.” Wednesday, he testified that he “did not have such a view” of the utility’s future, based on working with other utilities and knowing the initiatives that could still be launched.
While Zahn and Wannemacher’s trial was originally scheduled to begin February 5, this week, the judge overseeing the trial delayed its start to February 20, following defense requests. Jury selection is scheduled to take place on February 15 and 16. A separate jury will be seated for each defendant.
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