Romney tells aide to end role in project

Governor Mitt Romney has ordered state development head Douglas I. Foy to recuse himself from further involvement in a proposal to build a liquefied natural gas terminal in Boston Harbor, because of Foy's financial ties to the company behind the project, state officials said.

Foy acknowledged to the Globe in September that a portion of his individual retirement account was invested in stock of Virginia-based AES Corp., the energy company proposing the $500 million LNG project. At the time, Foy indicated that he did not see a need to recuse himself from involvement in the project as long as he disclosed his investments to Romney.

But yesterday, a spokeswoman for the governor said Romney's legal staff had since concluded Foy's investment was a potential conflict of interest.

''As soon as our legal office became aware of the potential conflict of interest, they directed, with the governor's approval, that Douglas Foy recuse himself from any future participation in the AES proposal," said Julie Teer, a Romney spokeswoman.

Foy, the secretary of the state Office of Commonwealth Development, could not be reached for comment last night. The decision, made Oct. 7, was first reported yesterday by the Associated Press.

In September, the AES Corp. proposed to build the LNG facility on Outer Brewster Island, part of the Boston Harbor Islands National Park, asserting that the location would reduce the number of LNG tankers off-loading fuel near populated areas around Boston. Federal officials have warned that the tankers are potential terrorist targets that could cause mass casualties if destroyed near a city.

In order to develop the island, AES Corp. would need approval from two-thirds of the state legislature as well as support from the state Department of Conservation and Recreation, which owns the island. AES has said it would pay $10 million annually to lease the site, as well as nearly $5 million in annual city property taxes.

The plan also would require approval from Foy and Romney. The governor's legal staff determined that Foy's role as regulator of the project combined with his financial interest in the company that would profit from it entailed a possible conflict of interest, said state officials.

Foy's recusal is not the first time his dealings with the AES Corp. have raised questions. In his former position as president of the Conservation Law Foundation, Foy created a consulting firm called CLF Ventures that unsuccessfully partnered with AES to try to purchase newly deregulated power plants. CLF also won a $1.5 million consulting contract with AES to lobby residents of Londonderry, N.H., to approve of a new AES-built gas-fired power plant. The partnership began after Foy blocked AES from building a coal-burning plant in Maine, but in the process befriended AES co-founder Roger Sant.

In fact, before Foy's investment in AES Corp. came to light, he arranged for a July meeting between Romney and Sant, according to records obtained by the Associated Press.

''Thanks for setting up the meeting with Mitt yesterday," wrote Sant in a July 21 e-mail to Foy. Sant previously knew Romney from their work together on the corporate board of Marriott International. ''It was a great discussion, but it was also a lot of fun getting together as old friends," wrote Sant.

Foy also arranged a February meeting between Sant and top state officials to discuss the LNG proposal, according to the documents.

Foy has asked Scott Harshbarger, the former state attorney general, for legal advice on the LNG issue, the Associated Press reported.