The Associated Press

Henry Duque, a six-year member of the California Public Utilities Commission, testified Monday that he didn’t know until last year that his agency regulates the wireless telecommunications industry.

Duque is under fire for investing $10,000 in a mobile-phone company the PUC regulates. Activists have sued to remove him from the $107,000 a year job.

The PUC regulates a host of wireless industry undertakings, including its interconnection agreements with wired phone companies, the designation of area codes, consumer complaints and, in some instances, it sets environmental rules on where antennas can be placed.

Duque, during nearly 90 minutes of testimony in San Francisco County Superior Court, said he didn’t think it was a conflict of interest to have purchased Nextel Communications Inc. stock.

“My feeling was that we don’t regulate wireless companies,” he testified.

Duque did not try to hide his investment, and noted it on economic-interest papers filed with the state. None of Nextel‘s minor business transactions were affected by Duque’s investment because the deals were approved with mostly a majority votes from the five-member commission.

He added he was never aware that Nextel was doing business with the commission.

“A commissioner cannot read everything. It is physically impossible,” he testified.

He also testified that he did not know Nextel was a wireless company, but he thought that the letters “tel” in the company’s name may have meant it had an affiliation with the telecommunications industry.

“I thought, gee, that may have something to do with telephones,” he testified. “I had no idea what they did.”

He testified that his stock broker said Congress regulated the industry. But he said he divested his holdings when a San Francisco Chronicle reporter called him last year and told him that the PUC does regulate the wireless industry.

“That was my first red flag that went up,” he testified.

Superior Court Judge Alfred Chiantelli was perplexed.

“On the advice of your stock broker, you purchased it and kept it and because of the advice of a newspaper reporter, you sold it?”

Duque replied: “Anything that’s in the gray area, you operate on the side of caution.”

The Public Utilities Code prohibits commissioners from having a financial interest in companies they regulate. Duque’s term expires in 2003.

The commission also regulates a host of other types of utilities, including energy companies.

The Foundation for Taxpayer and Consumer Rights of Santa Monica filed suit last year after the Chronicle disclosed that Duque purchased 700 shares in the nation’s fifth-largest wireless firm.

A ruling is pending.

The case is Foundation for Taxpayer and Consumer Rights v. Duque, 318146.