San Francisco Chronicle
A consumer watchdog group said yesterday that it was outraged that the state plans to pay the legal bills for one of its top utility regulators, who faces a lawsuit to remove him from office for violating conflict-of-interest laws.
The Foundation for Taxpayer and Consumer Rights filed suit two weeks ago to oust California Public Utilities Commissioner Henry M. Duque for buying stock in a mobile telephone company his agency regulates. But this week, the Santa Monica group learned that the PUC promised to reimburse Duque for his attorneys’ fees to fight the suit.
“The public should not be made to foot the legal bills for someone who so blatantly violated the state ethics rules,” said Pam Pressley, an attorney with the Foundation for Taxpayer and Consumer Rights, which asked Gov. Gray Davis yesterday to overturn the decision.
In a ruling Nov. 29, Attorney General Bill Lockyer found that Duque violated state rules when he bought 700 shares in Nextel Communications, the nation’s fifth-largest wireless firm, and appeared to forfeit his right to office. Lockyer also gave the lawsuit his blessing.
But Duque’s attorney, Joseph Remcho, said it is routine for government agencies to help defend their employees in court.
At least one outside expert agreed, even though he thinks Duque clearly violated state rules.
Robert Fellmeth, director of the Center for Public Interest Law at the University of San Diego, said the PUC might be obligated to pick up the legal tab because the suit stems partly from Duque’sposition as a commissioner.
But Fellmeth said the PUC could ask Duque to pay the government back if he loses the case.
PUC officials didn’t return calls for comment, but records show the agency initially turned down Duque’s request for reimbursement.
On Dec. 19, PUC Executive Director Wesley Franklin told Duque the PUC wouldn’t reimburse him for his expenses because the stock purchase “was undertaken for personal gain and . . . (is) therefore outside the scope of (his) employment.”
Pressley estimates Duque made up to $70,000 in profit on the stock. He bought the stock for roughly $27,000 on May 12, 1999, and sold it off in chunks during the next 15 months. Neither Duque nor his attorneys have said precisely how much money he spent or made on the transaction.
But on Dec. 22, PUC President Loretta Lynch told Duque the commission would pay his legal bills unless it turned out he was guilty of “fraud, corruption or actual malice.” The letter did not give a reason for the change.
Regardless, Fellmeth said the suit could cause an even greater legal headache for the commission in the future.
A court could rule that Duque’s seat should be considered vacant during the entire time that he held the Nextel stock, effectively voiding every 3-to-2 vote Duque participated in.
“They could all be unwound,” he said. “That is the $64 question.”