San Jose Mercury News
 The watchdog group that is trying to oust Henry M. Duque from the Public Utilities Commission asked Gov. Gray Davis on Thursday to stop the PUC from paying his legal bills.
The group, the Foundation for Taxpayer and Consumer Rights, sued Commissioner Duque on Dec. 29, alleging he should be removed from the PUC because he had held stock in Nextel Communications Inc., a company the agency regulates.
On Thursday, the Santa Monica-based foundation asked Gov. Davis to persuade the PUC to reverse its decision to pay for Duque’s legal defense in the matter. “Commissioner Duque has broken the public trust for his personal gain and now expects the public to pay for his legal defense. Gov. Davis cannot allow this to happen,” said Pam Pressley, attorney for the group.
A spokesman for Davis declined to comment.
Duque has denied the allegations of wrongdoing, and Joe Remcho, one of his lawyers, said Thursday that the agency should pay the legal bills. “It is routine practice for governmental agencies to defend their officers and employees,” Remcho said in a written statement.
Remcho also implied that the watchdog group, which advocates for consumers on a range of issues, may be trying to remove Duque — who was appointed by former Gov. Pete Wilson — because of policy disagreements. The “lawsuit comes from a plaintiff who thinks that the solution to the energy crisis is to file baseless lawsuits against commissioners who may disagree with them,” he said.
Although he has acknowledged owning some shares in Nextel, a wireless telephone company while on the commission, Duque said he sold his stake when he realized there might be a conflict. The Foundation estimated he made a profit of more than $ 64,000 on the shares. In November, California Attorney General Bill Lockyer gave the group permission to sue Duque over the issue, stating in an opinion that Duque should not have owned shares in Nextel.
The PUC did not initially agree to pay Duque’s legal bills. In a Dec. 19 letter to Duque, before the lawsuit was filed, executive director Wesley M. Franklin denied that request, partly because Duque had apparently invested in the Nextel stock “for personal gain” and not in the course of his job.
But the agency reconsidered Duque’s request, and on Dec. 22, PUC president Loretta Lynch wrote Duque that the agency would pay the legal bills under certain guidelines. The commission would not pay, Lynch wrote, if Duque were found to have committed “actual fraud, corruption or actual malice,” or if “a conflict of interest arises” between Duque and the commission. Duque’s lawyers must follow the agency’s fee guidelines. If Duque were to sue the watchdog group, Lynch added, the PUC would not cover those bills.
