FOR IMMEDIATE RELEASE WEDNESDAY, SEPTEMBER 3, 1997

CIV (202) 616-2765 TDD (202) 514-1888

U.S. JOINS SUIT AGAINST BASIN ELECTRIC POWER COOPERATIVE WASHINGTON, D.C. -- The United States has intervened in a suit filed against Basin Electric Power Cooperative of Bismarck, North Dakota, that accused Basin of overcharging the government millions of dollars on a contract at a 185 million watt power plant, the Department of Justice announced today. Assistant Attorney General Frank W. Hunger of the Civil Division said Robert J. Norbeck, a former chief auditor of Basin, originally filed the qui tam action on behalf of the United States. The original complaint has been sealed since 1995 to allow the government to investigate and decide whether or not to intervene. The court unsealed the complaint Tuesday. "We are saddened to bring this action against an electrical cooperative because such cooperatives historically have been the government's partners in bringing affordable electricity to rural America," said Hunger. "Nevertheless, we are committed to ensuring the integrity of this program and to protecting the taxpayer, and must aggressively pursue fraud whenever and wherever we find it." In an amended complaint filed in U.S. District Court in Bismarck, the Department alleged that Basin billed the Department of Energy's Western Area Power Administration for costs that were not allowed under a 1986 contract or were falsified. As a result, Western overpaid Basin approximately $23.8 million, excluding interest. According to the complaint, Basin breached its contract with Western and, on some of the overcharges, fraudulently billed Western. One of the allegations of fraud involved Basin's use of a 10-year amortization period for certain costs it charged the government under the contract, which ended in 1990. Basin customarily used 20-year amortization periods for those same costs at other power plants and, in fact, switched back to a 20year amortization period when the contract ended, which meant that Western paid a disproportionate share of costs. The complaint also alleged that Basin used a wholly-owned subsidiary, Dakota Coal Company, to fraudulently charge profit margins to Western that were not allowed under the contract. The

complaint also set forth several breach of contract claims. Pursuant to the qui tam provisions of the False Claims Act (31 U.S.C., Sec. 3730), private parties may bring fraud actions on behalf of the government and receive a portion of any damages if the government takes over the case and prosecutes it successfully. Under the False Claims Act, the government is entitled to treble damages plus civil penalties ranging from $5,000 to $10,000 per violation. The Department's Civil Division will pursue the case. The Department of Energy's Office of Inspector General investigated the matter. ##### 97-363