Posted on 05/01/2007 12:51:40 PM PDT by SmithL
As City Council members called for his resignation in late March, MLGW president and CEO Joseph Lee III quietly struck a deal to have his personal legal bills paid for by ratepayers.
Documents obtained by The Commercial Appeal show Odell Horton Jr., vice president and general counsel for Memphis Light, Gas and Water Division, provided Lee with an attorney engagement letter. It authorized Lee to hire Robert Spence at the public utility's expense to represent him during an ongoing federal investigation of possible malfeasance at MLGW under Lee's leadership.
Spence has so far billed MLGW $61,698.50.
The FBI is investigating why MLGW staff allowed City Councilman Edmund Ford to amass more than $16,000 in debt on three accounts while he served as chairman of the council committee that oversees MLGW's spending and budget.
Horton recommended that Lee, who had been subpoenaed to testify before a federal grand jury, obtain his own counsel with expertise in criminal matters in part because the probe inquired about his actions.
Lee, whose salary is $215,000 per year, personally helped prevent cutoff of Ford's utilities. Memphis Mayor Willie Herenton appointed Lee to the top job at MLGW in 2004. Spence is a former city attorney and Herenton appointee.
Since billing irregularities at MLGW became public in February, Spence has been a constant presence next to Lee, helping the utility chief weather calls for his resignation and staging a public relations defense.
As it turns out, the public will foot Spence's bill.
"As an employee of Memphis Light, Gas and Water, MLGW agrees to pay your legal fees related to the Edmund Ford investigation," Horton wrote in the March 20 letter, which Lee later signed.
The letter authorized payments to Spence's law firm at a rate of $210 per hour, plus expenses, and $175 per hour for associate attorneys at the firm.
It came with a stipulation: "If you are found guilty by a federal jury or enter a guilty plea in this matter, MLGW will seek recovery from you for the legal fees paid on your behalf."
The agreement did not go before MLGW's board or the City Council. In fact, Horton structured the engagement letter in such a way that approval wouldn't be needed. Horton asked that Spence invoice MLGW directly, saying "no single bill may exceed $24,999.00." The City Council requires MLGW to present all contracts worth $25,000 or more to the elected body for approval.
In a prepared statement, Horton said attorneys are "routinely hired to represent MLGW and its employees in their official capacities" without board approval. "All actions taken by Mr. Lee in this matter were in his official capacity as president and CEO of MLGW."
Horton also said MLGW agreed to pay the legal fees based on then-City Attorney Sara Hall's advice. In an e-mail to Horton, Hall wrote: "I would cease to pay for representation if there was a reasonable basis to believe that the actions were not in their official capacity or were not legal."
A City Council investigation and an MLGW audit found no violations of law, but concluded utility staff violated company policies in handling Ford's accounts. A grand jury investigation continues.
Reached Monday, Hall said during her tenure the city typically paid for legal counsel when its employees were called before a grand jury.
However, Hall said MLGW should only pay legal fees that relate directly to grand jury testimony. In Spence's case, he has represented Lee in front of the City Council and MLGW's board on multiple occasions.
In those instances, Hall said, the city would not typically pay the legal fees. "We do not pay city employees to get counsel to go before the City Council."
Political fallout
MLGW board member Nick Clark was shocked to discover the public utility will pay Spence's legal fees.
The utility's agreement with Lee means MLGW ratepayers are covering the bill to protect Lee from possible criminal charges, said Clark, who has urged Lee to resign.
"I believe that the only basis for a company to pay for criminal defense fees is when the company's policies have created a situation whereby an employee, in accordance with the execution of policies, is alleged to have committed a criminal violation," Clark said in a prepared statement.
"In this particular case, it was the active intent to violate company policies which led to preferential treatment of an elected official, thus creating the question of whether something criminal was taking place."
As a result, Clark said MLGW should cancel the agreement to pay Lee's legal expenses.
"The $60,000 already billed is nearly four times what was owed on Councilman Ford's utility bills," he said.
City Council Chairman Tom Marshall, who initiated the independent investigation of MLGW, also was perturbed.
"I think that is completely unacceptable," Marshall said in an interview. "Most of us on the council were led to believe Mr. Spence was compensated outside'' the MLGW budget.
'Offensive press event'
During his time on MLGW's clock, Spence has been involved in more than providing legal advice. He was a lead player in the media response and what Lee termed in an e-mail as the utility's "offensive press event."
On Feb. 26, according to internal e-mails, Spence met at MLGW's office with Lee, Horton, corporate communications director Gale Jones Carson and corporate communications supervisor Glen Thomas.
At the meeting, held one day before Lee appeared before a federal grand jury, Spence discussed with MLGW staff how they would respond to recent news about political favors at the utility, e-mails show.
As Lee's attorney, Spence also had input into a guest editorial published March 7 in The Commercial Appeal by MLGW board member Bill Taylor.
Taylor's guest column read in part: "The daily assault of this newspaper in lead stories and front-page accounts has apparently turned accusations into truths and reduced the public evaluation of this important issue to circumstantial innuendo."
Before the column appeared in the newspaper, Taylor sent it to fellow board members as a Microsoft Word file. Clark became suspicious. He noticed the file's properties listed Robert Spence as the document's author.
In an e-mail to MLGW board members and staff, Clark asked Taylor if Lee's personal attorney had written the column.
"Are you as a board member of MLGW being personally used to represent Joseph Lee's personal attorney's PR position on this matter?" Clark wrote.
Asked about Clark's accusations, Taylor said in an interview: "Knowing that Spence was Joseph's lawyer and the article was about Joseph, I ran it by him (Spence)."
Taylor wouldn't describe the extent to which Spence was involved in the guest column.
Two weeks after the newspaper published the editorial, Lee and Spence appeared before the City Council on March 21 to answer questions related to the City Council's inquiry.
"I want it to be clear that Mr. Lee is here today against the advice of his counsel, that I have advised that, while the federal investigation is ongoing, that he should not make any comments or statements to anyone," Spence told the City Council.
In other words, the attorney paid by a city division advised a city employee not to participate in a city investigation of that city division.
"It's disappointing that the ratepayers paid for an attorney whose primary advice was to simply not cooperate with a taxpayer-funded, fact-finding mission," Marshall said.
It is good to be King!
It seems like the name, ‘Ford,’ in Tennessee is fast becoming synonymous with corruption.
We knew that back in the mid-80’s.
Has been for years.
If a Ford is involved, 9 times out of 10 something dirty is happening.
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