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The Whistleblower

The Whistleblower #9 - Mar 11, 2002

The taxpayers get cheated, the taxpayers get fined. Last summer, California headlines screamed with stories of a conflict-ridden bureaucracy created by Governor Davis to address the energy crisis. Some energy buyers for the state failed to disclose that they held stock in the companies from whom they purchased power (at historically high prices), while other state consultants had prior business deals with the profiteering power companies; both are prohibited by state ethics laws. After reviewing these public employees and the Dep't of Water Resources (DWR) managers who hired them, the state's conflict-of-interest police, the FPPC, handed down an absurd penalty last week. The DWR admitted that it failed to follow the state's conflict of interest law, so, as punishment, the agency was fined $69,500. The fine, however, will not be paid by those responsible for this ethical lapse (Governor Davis or his executive appointees at the DWR), but by the public agency itself. That is, every last penny of the fine will be paid for by taxpayers. It's like having your car stolen, then getting a speeding ticket in the mail.

Meet Cal. Governor Davis's idea of Consumer Advocates. Explaining his reason for appointing former Edison exec and deregulation advocate Michael Peevey to the California Public Utilities Commission (PUC) Davis said, "I do believe the board needed some balance. We have three consumer advocates...We needed someone with business acumen." Davis's PUC, in the last year, has raised rates far greater than any previous Commission, handed Edison a massive and illegal ratepayer-funded bailout, is proposing a similar bailout of PG&E, and is expected to transfer approximately $8 billion worth of power costs from big businesses to residential and small business consumers at its March 21 meeting. If that's Davis's idea of consumer advocacy, then he ought to have his head checked. And if Michael Peevey is Davis's idea of balance, he ought to get his inner ear checked.

Bush judicial nominee not too Kuhl for whistleblowers. With much public ado about whistleblowers after the Enron scandal, Senators ought to be wary of a judicial nominee waiting in the wings. Unfortunately, California Senator Feinstein has given an initial go-ahead to Pres. Bush's candidate for the Ninth Circuit Court of Appeals, Judge Carolyn Kuhl. Judge Kuhl's views on whistleblower protections don't mesh with the newly appreciated importance of insiders who speak out against corporate fraud. In a "friend of the court" brief filed in a case involving Boeing, Kuhl argued that suits brought by whistleblowers on behalf of the U.S. government are unconstitutional--a view that served Kuhl's defense contractor clients, but which is out of step with the legal community. As a judge presiding over a case in which a perpetrator of Medicare billing fraud attacked a whistleblower with a costly, frivolous countersuit, Kuhl allowed the Medicare cheat to weasel out of his statutory responsibility to pay the whistleblower's attorney's fees. Judge Kuhl's arbitrary ruling was blocked on appeal and Senators should now block Kuhl's appointment.

Don't let "impact on Andersen" slow down investigation and prosecution. It has been suggested that an indictment of Andersen, one of the world's largest accounting firms, for its complicity in the Enron debacle, would have a serious negative impact on Andersen. According to the New York Times, former Federal Reserve Board Chairman Paul L. Volcker, who is leading a special Andersen oversight board, thinks that an indictment would hurt the company's restructuring effort. So what? Putting a thief in jail might be bad for his future, but we still throw the book at him. White collar criminals should be treated the same.
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The Foundation for Taxpayer and Consumer Rights (FTCR) is a non-profit, non-partisan advocacy organization. For over a decade FTCR and its advocates have exposed and challenged injustices that betray the public trust. The Whistleblower newsletter addresses core issues of the corporate and governmental crises of today and blows the whistle on the brewing fiascos of tomorrow. FTCR does not take a position on candidates for any elected office.
For more information about FTCR's work, to DONATE, to join the fight, or to comment, visit our web site at www.consumerwatchdog.org. 310-392-0522 xt.309.
2002 FTCR


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