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NEWS RELEASE
Jan 11, 2001


CONTACT: Pam Pressley - 310-392-0522 x307

Taxpayers to Foot Legal Bill of PUC Commissioner Duque

Consumer Group Urges Governor to Stop Misuse of Taxpayer Dollars
The Public Utilities Commission (PUC) has authorized payment of Commissioner Henry Duque's legal fees incurred in an action to remove him from office for his violation of PUC conflict of interest laws, according to a letter obtained by the Foundation for Taxpayer and Consumer Rights (FTCR) in response to its Public Records Act request. FTCR wrote to Governor Davis today urging him to take action immediately to prevent the expenditure of taxpayer money on Duque's defense. FTCR is seeking Mr. Duque's removal from office in a lawsuit filed December 29 with the permission of Attorney General Bill Lockyer on behalf of the People of the State of California.

"The public must have the utmost faith in the decisions of the PUC," stated Pam Pressley, FTCR staff attorney. "Commissioner Duque has broken the public trust for his personal gain (making a gross profit of over $64,000 on his illegal stock trading) and now expects the public to pay for his legal defense. Governor Davis cannot allow this to happen."

FTCR's lawsuit alleges that Mr. Duque violated section 303(a) of the Public Utilities Code which prohibits PUC commissioners from having a financial interest in the utilities they regulate. Mr. Duque purchased stock in Nextel Communications, a wireless communications company, in 1999 and held it over a year. FTCR estimates that Mr. Duque made a gross profit of $65-70,000 from his Nextel stock trades.

Attorney General Bill Lockyer granted permission to FTCR to bring a lawsuit seeking the removal of Commissioner Duque from the PUC. In a November 29 opinion, the Attorney General stated:
The Constitution requires that as a qualification for holding office as a Commission member, the member must not hold a financial interest in any corporation subject to regulation by the Commission…It would therefore appear that the defendant's office became vacant immediately upon his acquisition of the 700 shares of stock in Nextel on May 12,1999. The fact that the defendant subsequently disposed of the prohibited interest is immaterial and did not operate to restore him to the vacated office.

FTCR filed the lawsuit on December 29 in San Francisco Superior Court.

Copies of PUC letters first denying and then authorizing payment of Mr. Duque's legal fees are available upon request. Letter to Gray Davis follows:


January 11, 2001

By Facsimile Transmission 916-445-4633
The Honorable Gray Davis
State Capitol
Sacramento, CA 95814

Dear Governor Davis:

The Foundation for Taxpayer and Consumer Rights (FTCR) requests that you intervene immediately to reverse a decision by the Public Utilities Commission (PUC) that requires taxpayers to pay the legal fees of a PUC Commissioner who violated state conflict of interest laws. A Public Records Act request by FTCR has revealed that your appointee, PUC President Loretta Lynch, has reversed an earlier PUC decision and required that taxpayer money be used for the legal defense of PUC Commissioner Henry Duque, who illegally bought and sold stock in a company the PUC regulates. (See attached letter from PUC to Mr. Duque dated December 22, 2000). Commissioner Duque made a gross profit of over $64,000 on his illegal stock trading and now expects the public to defend him for his blatant violation of the Public Utilities Code.

Your appointee's decision to pay Mr. Duque's legal fees is especially egregious considering that the PUC is not legally required to do so. In denying an earlier request by Mr. Duque for payment, the PUC concluded that his "investment in the Nextel stock was undertaken for personal gain and that it was therefore outside the scope of [his] employment." (see attached letter from PUC signed by Wesley M. Franklin to Mr. Duque dated December 19, 2000) Gov. Code section 995 et. seq. only requires state agencies to fund the legal defense of their employees for acts performed within the scope of their employment. The PUC should not be committing public resources to defend Mr. Duque for illegal acts clearly outside the scope of his public duties.

FTCR is suing Mr. Duque on behalf of the People of the State of California, with the permission of Attorney General Bill Lockyer, to remove Commissioner Duque from office for his violation of section 303(a) of the Public Utilities Code. Section 303(a) prohibits commissioners from having a financial interest in entities that they regulate. Mr. Duque violated this law when he purchased, and continued to hold for over a year, stock in Nextel Communications, a wireless communications company regulated by the PUC.

The Attorney General, in a decision issued November 29, 2000, granted FTCR leave to bring an action in state court seeking removal of Mr. Duque, stating as follows:
The Constitution requires that as a qualification for holding office as a Commission member, the member must not hold a financial interest in any corporation subject to regulation by the Commission…It would therefore appear that the defendant's office became vacant immediately upon his acquisition of the 700 shares of stock in Nextel on May 12,1999. The fact that the defendant subsequently disposed of the prohibited interest is immaterial and did not operate to restore him to the vacated office.

The public should not be forced to defend an individual who has so blatantly breached the ethical duties of his office. We urge you not to allow this gross misuse of taxpayer dollars. FTCR requests a written response to this request before January 18th.

Sincerely,


Pamela Pressley
Staff Attorney


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