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Burlington financial scandal: This is getting weirder... and much worser (Part 1)

by: odum

Thu Oct 29, 2009 at 08:35:00 AM EDT


Yesterday was an odd day on the misappropriation of funds scandal relating to Burlington Telecom.

In the morning that I posted what I thought was a more-or-less common sense and low-impact diary on the matter, two other pieces were appearing in the traditional media: the latest from the Freeps and a rather bizarre offering from Shay Totten.

Totten may not have initially broken this story, but his work - and his narrative - have largely fueled it. In his latest "Fair Game" piece, though, he turns his narrative completely on its head without explanation. What had been a case of rulebreaking and hubris from the Mayor's office, enabled by an ineffectual City Council (making for a multipartisan - Dems, Repubs, Progs and Indys - scandal), is now... that's right... all a dirty Democrat plot. A mountain made of a molehill to make political hay - all part of a never-ending scheme to take the Mayor's office.

It's... weird. For example, Totten refers to an apology offered by the heretofore unapologetic Jonathan Leopold:

Leopold, for his part, has apologized for not telling the council sooner.

Oh? Totten's link leads to his previous column that contains no apology from Leopold whatsoever. In fact, it includes the Leopold quote "it was me, and I’m not ashamed of it." This is an apology? It is followed by the vague, but equally unrepentant "In hindsight, you can always find things you could have done differently, but this was prudent." As one reader told me yesterday, the link was as relevant to a supposed Leopold apology as if it had been a link to ebay.

And City Councilors certainly didn't hear an apology. This is from an email sent to councilors and City Hall from Independent City Councilor Karen Paul on Tuesday:

There is one other thing that is needed. When I make a mistake, I own up to it and do my utmost to make things right. This guiding principle applies in my personal and professional as well as my political life.
I don’t think an apology makes us look weak; rather, I think it makes us look human and shows humility. I think we are a forgiving community and we understand even when our elected officials err but our citizenry does not forgive or have trust in officials who don’t express remorse.
To stand strong to one’s convictions despite knowing one violated a Certificate of Public Good does appear to be rather cavalier. I would encourage you to reflect on these thoughts and be sure you don’t feel you owe the citizens of Burlington an apology.

So what flipped Totten so dramatically? Who knows. He has been clearly under extraordinary pressure since he began reporting this story. Take this exchange from Facebook (on the flip):
odum :: Burlington financial scandal: This is getting weirder... and much worser (Part 1)

Liz Curry
Liz Curry
there'sno bluner - listen to the Mark Johnson interview - the only gap is theDPS staff did not require the City to focus on the 60-day limit untilthey resolved Condition 17 of the CPG. Paying bills for BED, BT, theAirport has been common practice - it's not a loan- it kept BT going.Get the facts before scapegoating public officials who are acting onself interest.
Sat at 9:34pm
 
 [snip]
 
Shay Totten
Shay Totten
Infact, it is a loan as it has to be repaid with interest. It may becommon practice, and it may be what was needed to keep BT alive (which,BTW, I think is a great service and hope these actions don't sink it).The issue is that it wasn't done openly or with approval from thecouncil or Board of Finance - which was needed as it alters the ... Read Morefundamental approach to BT's operations.

Besides,councilors weren't briefed on the Condition 60 violation until May, sixmonths after the city says it first realized it was in violation. Thatsaid, the same councilors blustering now have known about this sinceMay and are as complicit as it gets.

Remember, too, Joe McNeilpointed out this week that he advised the city to fess up last Novemberto the PSB about its Condition 60 violation and they didn't take hisadvice. Why willfully ignore counsel like that?
Yesterday at 11:27am
 
Liz Curry
Liz Curry
Oh really? And you've checked your facts with the people directly involved and confirmed statements made?
Yesterday at 1:24pm
 
Shay Totten
Shay Totten
No, as a journalist I just make shit up. Puhleez.
Yesterday at 1:31pm
 
 [snip]
 
Liz Curry
Liz Curry
"thereis no explicit OK on record from the board of finance or the citycouncil to loan the money, which is what irks many councilors and thepublic" (Fair Game, Wed. Oct. 21). The fact is, there is no legal basisor reason for getting an "OK" from any governing body in the City. Thispractice is used quite often by any and all administrations to ... Read Morepaythe bills for BED, the Schools, and yes, BT. In fact, the bills beingpaid out of the general fund for BED's costs at the time were muchhigher than bills being paid for BT. It is not a "loan." A loan is alegal document with a promissory note. And in fact, more people knewabout this than you can mention on any given day, which is what makesthis a political witchhunt that suits the media fine.
Yesterday at 9:52pm 

Shay Totten

Shay Totten
GeezLiz, why bother with electing a city council if an administrationdoesn't need an approval from "any governing body in the City." Or, whyeven bother with elections? That'd be even simpler — save money, timeand all that messy democracy stuff.
In fact, there is astructure in place for the administration to report the financial andoperational activities: The Board of Finance, at a minimum, if not theentire city council who has to approve its budget, its filings with thePSB, etc.
So why is it that none of the people who "knew moreabout it than you can mention it on a given day" were not on thecouncil or the board of finance?... Read More
Also,the use of the cash pool - in every other instance you've noted andJonathan Leopold has noted — pertains situations where outsidefinancing was already secured and had not yet released funds to BED orsome other city entity. In other words, it wasn't an open-endedcommitment with no guaranteed end in sight.
It may have beenthe right move, the best move and the cheapest move to keep BT alive.Doesn't justify the taking action without consent.
I've said itbefore, and I'll say it again: I think BT is a great service superiorto Comcast in a multitude of ways. And, I want to see it succeed as I'mall for the public option in health care and in telecommunications.But, that's not the issue.
It may be a political witch hunt forsome, but for me it's a very simple narrative about the lack oftransparency in government when the public's money is involved. Period.
Thanks for posting - getting me all warmed up to write this week's column!

Totten is clearly not in a fun place for doing his job on all this. Curry is of course a longtime lefty usual suspect in Chittenden County and does a lot of great work.

In any case, the Totten flip comes on the heels of a strategy meeting on the matter that was held Sunday night that reportedly included Curry, as well as John Franco, former Councilor Jane Knodell, Mayor Bob Kiss, Dean Corren, Councilors Marrisa Caldwell and Emma Mulvaney-Stanak, Sandy Baird and Representative Dave Zuckerman (who is already promoting Totten's new perspective).

What was the strategy settled on? Email from the State Party Chair to the Progressive listserv this week suggests the us-versus-them approach has been embraced at the highest levels:

Martha Abbott marthavt at sover.net
Wed Oct 28 12:27:55 CDT 2009
Hey Folks--Bob's live show is on Ch. 17 today. Please call in with support:5:25 till 5:55862-3966
I'm sure there will be many calls from the opposition.

Are Independents and even Progressives who don't like this situation now simply the "opposition?"

It didn't look like it was going to happen initially, considering the multiparty makeup of the City Council and the commensurate multiparty nature of the screwup, but a decision has clearly been collectively been made by key Burlington Progressives to bunker down with Mayor Kiss and company regardless of the actual merits of the situation, in the process making this a partisan thing.

And that sucks. "My Party right or wrong" is an awful political mantra. In fact, reaction against that mantra within the Democratic Party is largely what the blogosphere is founded on. It's no coincidence that the Democratic Party has both creeped towards the left and begun amassing more political victories since the blogs started challenging its leaders and orthodoxy - especially when they screw up.

By digging in like this, the Progressives are decidedly going against the historical flow, and it does no one any good.

Step back from the brink, folks. This path leads you - and the city - into a world of needless hurt... especially since there may well be some smoking gun documents on the matter yet to surface (more on that soon).
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Burlington financial scandal: This is getting weirder... and much worser (Part 1) | 12 comments
Bunker Mentality (4.00 / 1)
Yeah this is all too bad.  Shay's twist might be because of  pressure from his his employer Paula Routly who is the domestic partner of Tim Ashe.  At least she was.  Just speculation on my part obviously.  We'll see what Shay says.

Liz Curry made a rambling speech about the rules applied to those who work in the public sector, at the forum the other night.  It wasn't very coherent, but she seemed to be saying it was ok to break cumbersome regulations.  It was hard to tell exactly what she was saying.

There has been a long series of events that should have awakened the city council to the fact they are a bunch of feathers opposite the steel anvil of the mayor's office across the fulcrum of civic balance in Burlington.  I do not see this as Progs vs. Dems.  I see it as Council vs. Mayor.  The council is weak and will continue to let things like this slip by them until they vote themselves the resources necessary to hire some staff, or perhaps even to pay themselves so they have what they need to do their jobs right.

I'm way out of this, (0.00 / 0)
but I'd certainly like to think that P's and D's can do a good job governing.  
Thats the mistake the Rs are counting on you making (4.00 / 1)
This isn't about Ps and Ds (or Rs and Is).

It's about these people. These Ps, Ds, Rs and Is.

And the fact that a huge part of "do(ing) a good job governing" is fessing up to your mistakes so the public can see that:

a) you won't repeat them, and;
b) that you're mature enough to handle the responsibility of governing

undercaffeinated

[ Parent ]
right on (0.00 / 0)
You are right on with this one John, in my opinion. Good government is needed, and bad government needs to be called on the carpet, no matter which letter they are.

I actually think that the biggest hurdle progressives face is that government repeatedly has shown that they are not "mature enough to handle the responsibility of governing", and all the conservative bullshit finds traction with voters because of that track record.

We all need to question bad government whenever it occurs, like this instance.

[ Parent ]
BT Exit Strategy Needed (0.00 / 0)
If City Councilors were told about Jonathan Leopold's use of cash pool funds for Burlington Telecom (BT) in May, they were told during an Executive Session.  Clearly this was information that the public has a right and a need to know.  This was an improper use of the executive session exclusion.

What is important to know is that there are and have been options other than those chosen by the Mayor and his CAO.
Since December, 2007's re-assessment of BT, it was known to insiders that Tim Nulty's financial projections were not going to be met, that BT would not be profitable by the end of 2008, and that profitability would not come for another 3 or 4 more years, if then.  Private investor money had nearly run out.  It was clear to City Hall that either more money needed to be found or BT needed an exit strategy.  This was prior to any monies being taken from the cash pool.

At that point, it was critical for all concerned parties to re-assess what approach the people of Burlington wanted to take.  We all needed to be informed.  How many of us knew that the due diligence process prior to BT going into business revealed that the experts consulted were wary that such a municipally owned business could be successful?  Given a full airing of all of the difficulties known by year end 2007, how many of Burlington's tax payers would have approved of spending additional money on the BT project?  Would we have agreed to put the people's City money at risk by lending to BT knowing the CPG protected us against loss?    

BT's CPG was put into place to protect the people of Burlington, who then voted for BT based on its 100% private investor funding.  Would voters have even initially approved of BT had a full and accurate disclosure been made?

For all of the reasons above.
For the multitude of scenarios wherein political abuse has  
  occurred and will likely recur in the future - the lure
  of political advantage is too strong to resist!
For the predictable harm BT suffers when its business
  secrets are demanded by a public which deserves to know
  what is happening with its money, all the more so
  when problems, such as these occur, and Comcast and
  others are all ears.

For all of these reasons and more - The City of Burlington should not be in the telecom business.

It is time to explore potential exit strategies.

Privatization

FairPoint Merger (operation by FairPoint -    
   $46 million in cash on hand,  
   competitive broadband offering - a win
   win for FairPoint and Burlington, which owns
   the fiberoptic infrastructure and hub).    

Sale to or Merger with other Telecoms

The City of Burlington should no more own a telecom than they should own the Burlington Free Press.

LOL! Fairpoint merger. That's funny! (0.00 / 0)
I note that all your proposed options are to privatize BT, but the funniest of them is the Fairpoint merger.

Fairpoint: hand over Burlington's communication's infrastructure to a bankrupt company whose lousy product and shoddy service is the stuff of legend? Really?

What we need is a plan for BT that takes into account the current economy and it's known issues, and providing a long term plan, including contingency planning, so there will be no questions about how to handle things like the need for a loan in the future.

Beware the Everyday Brutality of the Averted Gaze

[ Parent ]
HAH! (4.00 / 1)
Oh yes when trouble comes along PRIVATIZE PRIVATIZE PRIVATIZE!!
But seriously, merge with Fairpoint??? That's just crazy.

Council Dems resent the progressives. They also resent the Mayor's lack of effective leadership and see a very handy political opening. Of course they are going to take advantage of it. Thats how politics works.

I think we will probably find out that Democrats were very complicit because they knew it was the best move financially. Had it been made public initially, because of BT's fledgling status, Dems knew it would have been a huge story in the media who would undoubtedly situate the story around something like "Burlington Telecom  Wasting Taxpayer Dollars?"--damaging to both Dems and Progressives and to their hopes that municipally owned utilities serve the public better than private ones.

Agitate.Liberate.Create.

[ Parent ]
So.... (4.00 / 3)
Then should the City of Burlington get out of the
-fire fighting business
-road paving business
-water cleaning business
-book lending business
-elections business
-etc

-In America the people fear their government; in France, it is the government that fears the people

www.integralpsychosis.com

[ Parent ]
gosh (4.00 / 1)
if you had been around 100 years ago, we wouldn't own Burlington Electric

BTW - given the fact that for-profit private sector providers have not met the reasonable needs of many Vermonters, why do you think they should own telecom networks? how do you define the public interest?

[ Parent ]
Id like to ignore this... (4.00 / 1)
...but its what I was afraid of - that enemies of BT will be too willing to link what is a management issue with the utility itself.

Precisely why everyone involved should just issue humble mea culpas and move on.

undercaffeinated

[ Parent ]
How many stupid fucking ideas can you cram into one comment? (3.50 / 2)
Maybe we can bring some Enron executive on board to oversee the transfer?
It is time to explore potential exit strategies.
Privatization
FairPoint Merger (operation by FairPoint -    
$46 million in cash on hand,  
competitive broadband offering - a win
win for FairPoint and Burlington, which owns
the fiberoptic infrastructure and hub).    

Where did you find that crack-pipe business strategy?

This is not a case study for privatization.  It is a case study for why we need to be more aggressive in our support of public utilities.  

Companies such as AT&T, Verizon, Fairpoint, Comcast - the list goes on have completely failed in rolling out economically viable and effective infrastructure. They are ongoing failures. They don't work. They're broken. Even when they make money, they don't do the job we need them to do. We're fucked if we have to rely on them. How hard is it for conservatives to understand how economics work and what makes our community standards of living go up? The problem here is Montpelier/conservative/Republican and their love of taxpayer supported private crony monopolies and opposition to publicly owned economic generators.

I do not want to excuse Leopold's behavior and I don't.  However, the bigger problem is getting crony monopolists and business welfare queens like David O'Brien and Jim Douglas out of the way.

BT is and will be an effective engine of economic progress and should be supported, not forced into backroom financing and having arbitrary restrictions placed on it to benefit Comcast and other monopolies whose business model is 1. shitties service and 2. least roll-out 3. with fewest options for 4. the highest price.  

The public sector is not serving the economic needs Vermonters have in the Telecomm field. BT is an example of what we need more of and that includes much more transparency.  

[ Parent ]
Apologies (0.00 / 0)
In Shay's Blurt post today - about the council's creation of BT review panels - he again refers to Leopold's apology.
Leopold apologized to councilors last week for not being clear in his presentations that money from the city's so-called "cash pool" was funding BT, and said it was a mistake to keep them in the dark about the CPG violation.

Burlington financial scandal: This is getting weirder... and much worser (Part 1) | 12 comments
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