Tuesday, August 25, 2015

Corporation Commission Corruption Count now 5/5: Bitter Smith may have to swallow a bitter pill

To recap the Arizona Corporation Commission (ACC) saga.

  • BOBghazi STUMPgate got himself in trouble for texting APS lobbyists and dark money guys and then deleting the texts and trashing the iPhone. Just 73 text messages to work out a social date, he said.
  • The campaigns of newly elected commissioners Tom Forese and Doug Little were financed by monies widely believed to have come from Arizona Public Service (APS), a utility regulated by ACC.
  • Lest you had any doubt about what APS bought: these three guys voted to keep APS's solar rate increase on the table and not have it be part of a comprehensive rate case in 2016. (The media was most happy - at least they didn't vote to give APS the money right now!)
  • Commissioner Bob Burns went public with his idea that the solution to all this was to make it harder for the public and press to get access to Commission correspondence. Cover it up, Bob!
  • Keeping count? That's only 4/5. So this sorry story is about #5: Susan Bitter Smith.

This story is from investigations done by KJZZ. It starts here.

Tom Ryan is an Arizona attorney who is known for pursuing high-profile cases against politicians such as former Attorney General Tom Horne and former state Sen. Russell Pearce.

Ryan said he’s considering filing a complaint with the attorney general’s office calling for the removal of Commission Chair Susan Bitter Smith.

"This will not go quietly in the night and whoever she retains will no doubt fight it tooth and nail," Ryan said. "But the state of Arizona deserves a Corporation Commission that is not bought and paid for by the very people it’s supposed to regulate, the very industries it’s supposed to regulate."

Right on, but what's this about?

Bitter Smith, a Republican, is a registered lobbyist for Cox Communications, a status she's held long before her 2012 election to the commission.

Cox is regulated for cable by the Federal Communications Commission and local municipalities. But because it also offers telephone services, Cox is regulated by the corporation commission, which oversees the local telecommunications industry.

Above is the short of it. Following is a disclosure.

That caught the eye of a Washington, D.C., watchdog group called the Checks and Balances Project, which has been in a highly publicized struggle with the commission this year for access to Commissioner Bob Stump’s cellphone records.

Checks and Balances raised conflict questions about Bitter Smith to KJZZ, which then conducted independent research and reporting that included a review of various public documents, tax records and interviews with Bitter Smith, former commissioners, a former attorney general and various ethics and Constitutional law experts and attorneys.

And here is what the KJZZ investigation unearthed.

Bitter Smith told KJZZ that being a registered lobbyist for Cox doesn’t violate any laws.

Whaaa? She's elected to regulate the company she lobbies for? Legal, Smeagol. (Subtle, I know - check out the Lord of the Rings.)

Bitter Smith said she’s never been paid to lobby for Cox, nor has she ever actually lobbied for Cox.

"I’m not an employee, never have been an employee, never have had any relationship with Cox directly," Bitter Smith said. "I’ve always worked for the cable TV association."

She’s referring to the Southwest Cable Communications Association, a cable industry trade group where Bitter Smith is executive director.

Cox is one of her members, and the association, which is also a registered lobbying group, sponsors events and luncheons to which lawmakers are invited and Cox employees attend, she said.

So she said the lobbyist registration is simply for the purpose of putting everything out in the open.

"It’s just an abundance of caution to do that," she said. "I think it’s good. I think it creates huge transparency."

And it highlights a huge conflict of interest, does it not?

A handful of Cox and Suddenlink employees also sit on the association’s board of directors, which approves Bitter Smith's employment as executive director and her $150,000-plus annual salary, according to Bitter Smith and the group’s tax records and website. That’s roughly 40 percent of the group’s annual revenue, the vast majority of which is derived from member dues.

Bitter Smith stresses the telecom entities she regulates at the commission are always legally and financially separate businesses from the cable side of companies like Cox and Suddenlink.

"The video side of Cox is a member of the cable association. The telephone side is not. There’s no nexus there," she said. "Their budgets are set in separate divisions and corporate entities. They are separate financially. They have to be because that’s how they’re taxed, that’s how they’re filing their financial reports."

OK - read the full KJZZ report because there are more smeagolistic subtleties here that will tie your brain in knots. In the meantime, one might think that a commissioner with these ties would recuse herself - every time a related case came before the Commission.

She recused herself four of those times, such as last year when a tariff increase was approved for Cox.

But she didn't recuse herself on three matters, which she said was accidental, including another tariff increase for Cox approved in 2013.

"Probably should have, just didn’t catch it," she said."It was on the consent agenda, I zoomed through."

She also didn't recuse herself in May from voting to rescind a $225,000-bond requirement for Mercury Voice & Data, an entity identified in public documents as doing business in Arizona as Suddenlink Communications. She said she missed that one accidentally as well.

"Suddenlink is my member, Mercury Voice & Data is not an entity that I’m familiar with," Bitter Smith said. "If I had understood, I probably would have, you know, just for optics sake. There’s no legal reason I would need to do that but, had I understood that there was another entity that they now form with a new name, separate entity with a new name, I probably would have."

In short, SBS, is not on top of it, not doing her homework, just drawing some extra salary from the ACC (meaning you taxpayers).

Like I said, the whole case here is edgy. Here is the KJZZ conclusion.

Craig Holman with the Washington, D.C., government watchdog group Public Citizen said conflict of interest laws are purposefully designed to be complex because they deal with abstract things, such as appearances of impropriety.

"A good conflict of interest law would not allow this person to sit on this corporate commission," Holman said. "That raises that appearance of conflict of interest and this is where conflict of interest laws are supposed to step in."

Renz Jennings, the former commissioner who was the petitioner in the West case [in which an elected Commissioner was removed], said he’s surprised Bitter Smith didn’t sever her outside ties before taking office.

"If this is lawful, then the statute should be changed so that it isn’t lawful," Jennings said. "There’s a clear risk that she is going to be wearing the wrong hat when she’s making a decision based on where her own self interests lie versus where the public interest lies."

Five of five. The Corporation Commission Corruption Coefficient just maxed out at 1.0.

From the perspective of a taxpayer and voter, game over. It is not enough to vote for these people because they share a political party affiliation. We need Commissioners who work for the public interest, not against it.

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