PUC official pleads case in stock deal
San Francisco Chronicle
Fending off a suit to remove him from office, one of the state’s top utility commissioners testified yesterday that he had no idea investing $27, 000 in a mobile-phone company violated state law until a Chronicle reporter asked him about it 15 months later.
State law specifically bars members of the California Public Utilities Commission from owning stock in companies they regulate, including telephone firms. But PUC Commissioner Henry M. Duque said in San Francisco Superior Court that his stockbroker advised him that buying stock in Nextel Communications did not pose a conflict because it was overseen by federal regulators.
But Duque said it never occurred to him to consult his lawyer or anyone at the PUC. Duque said he didn’t realize there was a possible problem until a Chronicle reporter called him in August 2000. Duque said he sold the stock within 48 hours, after unsuccessfully trying to track down the PUC‘s top lawyer.
“My feeling was (the reporter) was someone who influenced public opinion,” Duque said. “If he feels there is a perception of conflict, that’s good enough for me.”
But Judge Alfred Chiantelli seemed flabbergasted.
“You bought the stock on the advice of a stockbroker, and sold it on the advice of a newspaper reporter?” Chiantelli asked. Duque initially said yes, then added that the reporter just presented a “fact” rather than advice.
Duque voted on or participated in at least four matters involving Nextel, though Duque testified that he didn’t remember the cases or know about the connection to Nextel. Duque said PUC commissioners don’t have the time to read about every case and rely heavily on their staffers for advice.
Yesterday’s testimony was intended to clear up two key legal questions in the case: Did Duque deliberately buy stock in a regulated company? And if it was inadvertent, did Duque sell it in a reasonable period of time?
In August, another judge ruled that because of a loophole, the law does not contain any penalty for commissioners who intentionally flout the statute.
But the law states that any commissioners who inadvertently obtain stock in a regulated firm are to be booted from office if they don’t sell it in a reasonable period. It’s unclear, though, when the clock starts ticking.
The Foundation for Taxpayer and Consumer Rights, the watchdog group that filed the lawsuit, argued that Duque should have sold the stock as soon as his stockbroker notified him about the purchase in May 1999.
But Duque’s attorney, Joseph Remcho, insisted Duque didn’t realize he held a regulated stock until the Chronicle reporter called, and points out Duque sold the stock two days later.
Chiantelli said he will make a ruling after reviewing additional written comments by both sides.
