Tag: Edmund

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Cover Feature News

Power Play

CREDIT: (AP Photo/Wade Payne)

In publicly rejecting MLGW president Joseph Lee’s resignation last Thursday, Mayor Willie Herenton declared, “I will not, cannot in good conscience participate in a media, political witch hunt that is currently operating in the city of Memphis around the leadership of this utility company. Let me also say that I cannot approve any initiative that has the support of The Commercial Appeal, Carol Chumney, and Myron Lowery.”

He referred to the troika as “an array of evil.”

After refusing to accept his resignation, Herenton encouraged Lee to focus on “regular folk” and their mistrust of the utility’s meter-reading and billing.

“This is one disturbing issue, that I have been overwhelmed by criticism and concerns in the community. I’m asking Mr. Lee, help me and the citizens understand the spiraling increase … that leads many to believe that the billings are excessive and arbitrary,” Herenton said.

(AP Photo/Wade Payne)

Herman Morris

Herenton then announced his solution: “Next week, I will be requesting from the Memphis City Council an allocation of funds to provide assistance to needy citizens, many of whom are on fixed incomes. I will be asking the City Council to support my request for $5 million … to assist us in helping us to help the people who need it most.”

Every Thursday, the MLGW board of commissioners meets downtown at the utility company’s headquarters. Before the afternoon session, the floor opens to citizens wishing to address the board. Last week, Georgia King took the floor and asked a key question, not only for the future of MLGW but also for election-year city politics.

“When was the customer ‘VIP list’ started, and by whom?” she asked.

King was referring to the list of high-profile MLGW customers whose utility accounts were under the supervision of MLGW executives. The list, which was apparently generated as the result of an e-mail by then MLGW head Herman Morris, was released to the public by Lee’s attorney Robert Spence just after Lee’s grand-jury appearance last week.

MLGW board chairman Rick Masson assured King that an internal investigation would soon be under way to address the question.

Though Herenton had rejected Lee’s resignation earlier in the meeting, he left the door open to revisit the issue, after first decrying the array of evil, which he perceived as trying to force his hand to remove Lee following the revelation of Lee’s “preferential treatment” of VIP-list member and city councilman Edmund Ford.

(AP Photo/John L. Focht)

Willie Herenton

“I find it unacceptable at this point in time to consider accepting his resignation, when, apparently, the wave of public sentiment and the blitz of bias exerted by The Commercial Appeal and other members of the media, I believe, has had undue influence, perhaps, on many key decision-makers,” Herenton said.

The mayor then acknowledged that City Council chairman Tom Marshall had initiated an independent investigation of MLGW, and he contrasted the two approaches to solving the crisis of public confidence in the utility company — the “media, political witch hunt” of the evil array and the objective investigation.

Marshall told the Flyer that “the mayor indicated that he is deferring until the results of the investigation are complete. Ultimately, he will revisit the issue of the termination of Mr. Lee. If you listen carefully, as I perceive it, the mayor is still open to that possibility, depending on the outcome of this investigation.”

Joseph Lee

The mayor focused on the differences between having an agenda for Lee’s removal and the facts to support such a move. “Hopefully, the investigation will be thorough, unbiased, not tainted by any predispositions or judgments based on a biased media that is really focused on discrediting Joseph Lee and this institution,” Herenton said, adding, “I applaud the councilman [Marshall] for his leadership and hope that the individuals who have accepted that engagement will conduct it with the highest of integrity and professionalism.”

Marshall appointed attorneys Oscar Carr and Saul Belz to lead the investigation. The attorneys were slated to outline the investigation plan at the Tuesday, March 6th, City Council meeting. Marshall says that Belz will present the results of the investigation to the council March 20th.

“Part of my reason in not accepting this resignation is that that investigation has not been complete,” Herenton said. “I have no facts surrounding any recommendations that Mr. Lee should be removed from his position.”

Justin Fox Burks

Carol Chumney

While Herenton exercised his prerogative to reject Lee’s resignation, Marshall says that Lee’s future as MLGW president rests as much with the council as it does the mayor.

“The City Council has authority, as prescribed in the charter, with 11 [out of 13] votes, to remove the president of MLGW without the consent of the mayor. In addition to that, the council also appears to have the authority to remove all of the [MLGW board] commissioners without the authority of the mayor,” Marshall said.

The MLGW “crisis of confidence” issues encompass more than the creation and maintenance of the so-called VIP list. The independent investigation will also address the meter-reading and billing practices of MLGW, which Herenton said give the appearance of “excessive and arbitrary” billing. Herenton has attributed the questionable billing practices to a “a conspiracy to sabotage [Lee] from within.”

Marshall offers a simpler explanation. “I’m having trouble believing [the sabotage allegation]. I don’t think that such sabotage exists,” Marshall said. “There is the potential for incompetent billing practices going on, but not as the result of any kind of direct effort. If there is malfeasance, it’s the result of inability,” added Marshall.

MLGW board member Nick Clark expressed a concern for the utility’s business practices that may not go away with leadership change. “The core problem, in terms of the future of MLGW, is the politicalization of business issues, because that interferes with the operation of a public utility.

“Why does MLGW have a problem with the culture of mistrust with certain members of the City Council?” Clark added.

It hardly needs to be said that that mistrust goes both ways. At this point, neither the public nor anyone else has a clear grasp on just what the problems are at MLGW. Are bills really out of line? Is Lee a capable administrator or just a Herenton crony in over his head? Was Herman Morris’ VIP list anything more than a way to maintain good PR? Were favors granted to others besides Edmund Ford?

With any luck, the coming weeks will bring some answers. Meanwhile, the power struggle continues.

Attorney Saul Belz, who will lead the independent investigation of MLGW, is scheduled to appear before the City Council, in order to provide the council with the scope and timeline of the investigation. Visit www.memphisflyer.com for updates throughout the coming week.

Categories
Editorial Opinion

MLGW: The Fallout

Maybe he should have sold it.

When Mayor Herenton suggested several years ago that serious consideration be given to the possible sale of Memphis Light, Gas & Water to an investor-owned utility company, he found few supporters, aside from the banks and brokerage firms that would have done the underwriting. The more typical response was that the idea was kooky and unthinkable and

just what you’d expect from “King Willie.”

So now MLGW head Joseph Lee is appearing before a federal grand jury, there are indications that politics have corrupted the utility, and the ordinary Memphians who are the shareholders of MLGW get bad news, high bills, Memphis Networx, and diversion of money from the water division to a professional basketball team.

It might seem to add up to a great platform for former MLGW CEO Herman Morris to run for mayor against Herenton this year, but it’s not that simple. There’s enough credit and blame to go around for both of them. Morris, by the way, has made no official announcement but has told several people he is interested. The filing deadline is not until July, and qualifying petitions can’t be pulled until April.

Herenton, remember, promoted Morris to CEO from legal counsel and gave him a free rein. When Morris’ term expired, Herenton let him continue and even approved giving him a raise to a salary higher than the mayor’s own. Morris left with a generous pension and severance package, although not as lucrative as the one he originally sought because Herenton thought it was too much and blew the whistle.

Right after the big windstorm in 2003, Herenton famously made a campaign visit to Little Rock while Memphians coped without power. In a press conference after the storm, he passed questions about MLGW’s slow response to Morris. Neither man can claim stellar marks for that one.

Herenton replaced Morris with Lee in 2004 and replaced several board members as well. That was overdue. The board had been dominated by cronies, consultants, and preachers for too long.

Late last year, Herenton chose his communications assistant (and Democratic Party activist) Gale Jones Carson to be MLGW’s head of public relations. She says the political favors that have been recently uncovered at MLGW predated Lee’s tenure. But the argument makes no sense. Herenton appointed both Morris and Lee, as well as the board members. And if he wanted to cut down on the politics and the impression of political skullduggery, he should have gone outside his inner circle and hired someone other than Carson for the PR job. There is no way she can be seen as a neutral spokesperson, given her history, especially if Morris jumps into the mayor’s race.

Candidate Morris would be questioned about his performance at MLGW. What does he know about “the list”? It seems there was such a thing when he was CEO. (See our story on page 15.) Why did he allow MLGW surpluses and PILOT payments to be used for Memphis Networx and the financing of FedExForum? Can the city afford the pensions, union pay scales, and health-care packages that were approved on his watch?

In short, both Herenton and Morris are likely to be careful about throwing stones. MLGW’s office headquarters is crawling with loyalists and grudge-holders for both of them. And now federal investigators are on the case. This looks like a story with staying power until the October election and beyond.

Categories
News

Politics, Favors at MLGW Preceded Lee

Politics and special attention at MLGW preceded current CEO Joseph Lee and were extended to, among others, the former editor of The Commercial Appeal, according to e-mails obtained by the Flyer.

On March 29, 2002, then-MLGW CEO Herman Morris wrote an e-mail to communications manager Mark Heuberger and vice president Curtis Dillihunt about the “CA Editor Problem.”

Morris wrote that he received a handwritten note “from the editor of the CA with a letter of complaint from his wife” requesting Morris’ help in a billing matter.

“This could set editorial policy toward MLGW for years and must be handled with touch,” Morris’ e-mail says. “I tried to call him Thursday but he was not in. I will be out of town 4/1/02 but will call him when I return on Tuesday. I would like you to get involved and make sure that we handle this matter with sensitivity.”

The e-mail has not previously been reported by The Commercial Appeal in its coverage of politics and special treatment at MLGW. The CA editor at the time of the e-mail was Angus McEachran.

The e-mail was obtained by the Flyer from MLGW communications manager Gale Jones Carson on Tuesday, shortly before our deadlines. It continues:

“Finally, I need to develop a list of customers that require my personal awareness, attention, or staff intervention when they have problems. Generally, customers who can call me or the mayor at home should be on the list. The mayor(s); city councilmen; county commissioners; state legislators; congressmen; any city director; editor of the CA; news or station director of TV stations; hospitals; jails; airports; FedEx; other big plants or customers; Fred Smith, Jack Belz, Mike Rose, Ira Lipman, Maxine Smith, Carol Miller (my sister), Lori Miller (my niece), Haymond Turner (my inlaws), Tom Garrott, Ron Terry, Marc Jordan, Pat Tigrett, Dean Jernigan, Herman Ewing, Pitt Hyde, Ben Hooks, Jesse Turner, Russell Sugarmon, Bill Crawford, and Pete Aviotti.”

For more on this breaking story and Morris’ list, go to www.memphisflyer.com.

Categories
News The Fly-By

All in the Family

CREDIT: Melking | Dreamstime.com

Full disclosure: At this time last week, I was planning to write about the incestuous relationship between MLGW and city government.

Of course, I was only going to talk about interlocking pensions and retirement benefits. But then came news about a list of elected officials that MLGW insiders considered friends and family.

The Commercial Appeal reported last week that Mayor Willie Herenton, along with City Council members Edmund Ford, Rickey Peete, E.C. Jones, Myron Lowery, Jack Sammons, and former council members John Vergos and Pat Vander Schaaf, were all included in MLGW’s “Third Party Notification” service, a program designed to alert friends and family if loved ones’ utilities are in danger of being cut off.

But the politicians’ cut-off notifications, if there were any, were slated to go right back to MLGW executives.

Talk about friends with benefits.

Gale Jones Carson, MLGW’s new director of corporate communications, sent out a statement this week saying that the list was compiled before Joseph Lee, the former city finance director, was appointed president of MLGW in 2004. And that people included on the list probably didn’t even know it existed.

“We know that it’s more than a decade old,” said Glen Thomas, supervisor of corporate communications for MLGW. “Judging from the people on there, it has to be pretty old.” Thomas said he didn’t know what steps MLGW executives would have taken if one of the politicians’ accounts became delinquent. One can assume, however, that if someone wanted to know about it, they probably would do something about it.

In her statement, Carson said she could not explain how or why certain elected officials were selected for third-party notification. If council members didn’t have knowledge their account was being flagged, that means MLGW executives — for whatever reason — were interested if certain individuals were ever at risk of getting cut off. Was the utility simply being nice? Or was it looking for leverage with members of the City Council?

Technically, MLGW is owned by the city. The council has to approve rate increases and budgetary items. But MLGW has its own CEO, CFO, and board. That leads to some interesting overlap.

Carson created a stir in January when she left her job as Herenton’s spokesperson to work for MLGW, “bought” her six years back from her previous employment at MLGW, added it to her time working for the city, and because she now had 12 years of service under her belt, started collecting her city pension. And an MLGW paycheck.

But last week City Council attorney Alan Wade determined that there was nothing improper about what Carson did, even if she did buy her time back right before retiring.

“That may seem unfair,” said Wade. “If she had bought her time back when she first came over to the city, it would have been $9,000 as opposed to $14,000. By waiting, she penalized herself.”

More than 30 other employees have used the system in the same way; five of those were with MLGW.

“The two pension plans are separate and distinct. They’re not one and the same,” said Wade. “If an MLGW employee comes to the city and is in payment mode, he or she cannot buy into our plan. They have to start fresh.”

Lorraine Essex, head of human resources for the city, said she doesn’t know why MLGW has a different pension plan than the city. “This is the way the plan was set up in the ordinance,” she said. “It didn’t just happen this way, but I’m not sure how old the provisions are. Probably older than some members of the council.”

That doesn’t explain why employees can transfer time from MLGW or the Memphis library to their years with the city, but don’t have to add their time together. Employees should get what they’ve earned; I just wonder why there is an option that leaves the public paying for a pension and a salary at the same time.

Right now, an underlying problem is the “12 and out” provision that lets both elected and appointed officials retire after 12 years of service with the city. The industry standard is more than double that and that’s what the city now uses. The “12 and out” provision was ended November 2004 but, because of grandfathering, may come up until 2016.

Politicians with third-party notification, on the other hand, looks to be a thing of the past. Herenton is strongly recommending that the board discontinue the program immediately. MLGW’s Thomas said he doesn’t know what will happen to the list or if there will be any legal ramifications for the utility.

But with a lawsuit pending and the feds investigating, it seems that when you join this family, it may be for life.