After Weeks of Whining Arrington Campaign Brings in Sleaze Specialist

After weeks of whining about what he called Robertson's "negative" and "dishonest" attacks against him, Congressional District 19 runoff candidate Jodey Arrington has brought in a campaign manager known  for being a "sleaze master."

Scott Yeldell, Arrington's new campaign manager, was described in 2014 as running "one of the sleaziest campaigns of the year, a campaign that featured incredibly inappropriate and dishonest attacks."

Arrington withdraws from TTU Republicans debate

Scott Yeldell showed up at a Texas Tech College Republicans meeting last night identifying himself as "campaign manager" for Arrington. After failing to get his way with the organization Yeldell announced that Jodey Arrington would not participate in the college Republican sponsored debate.

"We had members who were supporting Arrington. Not anymore. We tried to call Scott Yeldell this morning and he hung up on us," explained Megan McMillan, TTU College Republicans President.

"We are still going forward with the event and having Mr. Robertson come," said McMillan.

"We've never had anyone treat us the way that Mr. Yeldell treated us. It was insulting," she continued.

Yeldell's gay bashing

Yeldell is no stranger to controversy. He ran the 2012 campaign of Francisco Canseco of San Antonio for the 23rd Congressional District.

It was a particularly ugly campaign as the New York Times article describes:

It has surprised no one that things have turned nasty, but one advertisement stands out. Mr. Canseco’s campaign distributed a mailer that used an image of Jesus Christ and a picture of two men kissing to highlight what he says is Mr. Gallego’s liberal record on abortion and gay rights.

Interestingly, Yeldell's tactics were not successful as Canseco lost his election for Congress.

Is there any doubt who fed the Michael Bob Starr…story to the media?

2014 wasn't Yeldell's first foray into dirty campaigning.

In 2007 The Coloradoan ran a story describing Yeldell's resignation from a Ft. Collins, CO campaign for "dishonesty."

Yeldell had written a letter to the editor of The Coloradoan misrepresenting his relationship with a campaign he was managing. He is quoted as admitting, "It was a mistake. An amateur, thoughtless mistake."

Scott Yeldell works for Marathon Strategies. The Arrington campaign has been paying Marathon since November. 

Is there any doubt who fed the Michael Bob Starr "gay rights activist" story to the media?

Is the Arrington campaign in a panic?

Does this signal a change of tone for the Arrington campaign? Arrington has previously condemned what he described as negative campaigning by Robertson.

Will he change his mind? And if so, why? This is an interesting development early in the runoff. 

A change this radical, if one comes, suggests a candidate who is in a panic. Whether that is true, or whether there is reason to panic, remains to be seen. 

We contacted Jodey Arrington for comment but did not receive return communication by the time of publication.


Purchasing Director’s E3 timeline causes LP&L uproar

Public information is released that brings city manager under fire

That loud squeal you may have heard this morning was “Captain Coverup” Todd Kimbrough’s expression of surprise and dismay over the release of previously confidential information from the LP&L Director of Purchasing, Felix Orta. That information, titled “E3 Consulting Invoice Timeline” is the basis of the “new information that has come to light” that caused a majority of the Electric Utility Board to change its mind on May 20 with regard to CEO Gary Zheng. It is also the same information that caused LP&L CFO Andy Burcham to take his concerns to the Federal Bureau of Investigation.

“He was told by E3 that they would not bill us as long as they received the generating plant.” –Felix Orta quoting James Gilmore

Those notes outline what may be a possible case of fraud and irregular bid procedures at the electric utility. The irregularities involve the handling of invoices for work done in 2013 by E3 Consulting, an affiliate of Alpine Energy Group. E3 has since sold to NAES. The sale was announced February 20, 2014. The invoices were presented to LP&L as past due invoices on February 24, 2014 by E3 President Donald Hurd. The Sandstorm Scholar contacted Donald Hurd. Hurd said he did not want to discuss the invoices. According to Orta’s presentation to the EUB on May 20, James Gilmore, LP&L Production Supervisor, claimed “that he was told by E3 that they would not bill us as long as they received the generating plant.”

Readers may remember that Alpine Energy was the company that LP&L staff was prepared to recommend to the EUB as the winning bidder for the now defunct 2013 RFP.

When the Sandstorm Scholar originally requested the E3 invoices LP&L Acting CEO and General Counsel Todd Kimbrough refused to release them claiming privilege because of the possibility of civil litigation over the unpaid invoices. We have since requested them a second time and, because this timeline and other materials request might possibly implicate the general counsel in institutional or criminal malfeasance, we have asked that the city attorney’s office handle our requests. We were then given Orta’s timeline on Tuesday afternoon by the city manager’s office. We are still hopeful that we will receive the invoices which originally may have totaled as much as $248,000.

This is information that Victor, Captain Coverup and others do not want you to see. (click here to see Orta’s confidential document)

Sandstorm Scholar sources tell us that Acting CEO Todd Kimbrough, Councilman Hernandez and others are “livid” over the release of this timeline and the anger is directed at Lubbock City Manager James Loomis. There have already been suggestions that James Loomis, the statutory officer of public records, may be the second consecutive Lubbock City Manager to be fired over dealings with LP&L. Lee Ann Dumbauld was the first, having been fired after asking for an audit of LP&L procurement practices.

This is information that Victor, Captain Coverup and others do not want you to see. It is a frightening glimpse into what EUB Vice Chairman Jerry Bell thinks is acceptable behavior on the part of management.

Ignorance of this evidence (if they didn’t report it then it isn’t real) is why the Lubbock AJ editors, after meeting with Councilwoman Latrelle Bright Joy two weeks ago, blamed the votes of six EUB members on Mayor Glen Robertson’s bullying. Robertson couldn’t lead his council in a fire drill if the building was burning and he was the first one through the door; it is irrational to think he could lead or bully six business people on the Electric Utility Board into putting Zheng on administrative leave. If anyone is to be credited for the removal of Gary Zheng it is the persistence of board member Clayton Isom who repeatedly placed Zheng’s employment status on the EUB agenda even after seeing Marc McDougal booted from the board for the same conviction about Zheng’s need to go.

Lubbock City Manager James Loomis is a fearless champion of transparency in government.

It is noteworthy that local editorial pages did not cry foul when Joy made a disingenuous claim of conflict to get McDougal off the board. Neither did they blink earlier when the city manager was fired over her suspicions of shoddy business dealings at LP&L; suspicions which have now been validated by its purchasing director. Leading that charge were the two most notorious strong-arm artists on the council, Latrelle Bright Joy and Victor Hernandez. Nor have opinion leaders focused attention on Isom, who has been cordial but relentless in his pursuit of Zheng. There was no blazing editorial headline when LP&L CFO Andy Burcham, who, like Felix Orta, is of unquestioned integrity, felt the invoice irregularities merited reporting directly to the FBI. It will be interesting to see if they ignore this latest evidence of poor management and questionable dealings or if they will make a red-faced reversal.

Here is what the reader can be certain of: Lubbock City Manager James Loomis is a fearless champion of transparency in government. Anyone who goes after him over this episode may have something to hide.


Local government scorecard

Our local government scorecard is the news and the news behind the news. Call it insider baseball or call it too much information. Either way it’s what you won’t read anywhere else.

Texas Tech University
Mickey Long, Chairman of the Board of Regents, released a statement saying that he had no statement to make regarding the board’s choice of chancellor.

Evidently the decision has been made and the chairman wants you to know that he knows but you don’t.

We’re impressed.

We can guess that the finalist understandably wants a little time to inform staff and family but the release had a hint of tackiness.

City Council
Mayor Glen Robertson has placed the following item on the council executive session agenda: Discuss the legal grounds for the removal of Electric Utility Board members for cause. The meeting is Thursday.

Let’s read between the lines a little.

At the last EUB meeting Secretary James Conwright tried to abstain from a vote on Dr. Gary Zheng’s termination. The problem with that move is that EUB rules prevent abstention and require that it be intepreted as an affirmative vote.

It was our observation that Conwright then chose, after being informed of corporate counsel’s ruling, to vote “for” Zheng’s termination.

Conwright has several issues to contend with. One is his youth. These are difficult decisions involving people’s lives and the well-being of their families. Not just Zheng’s family but, in the balance, all LP&L employees are affected by the vote and that cannot be taken lightly. If last week’s vote caught Conwright on the fence in a transition from “nay” to “aye” let’s be slow to judge him harshly.

When it comes to Gary Zheng most of the Electric Utility Board imitates the no evil monkeys.

Also, emails from city hall suggest that Conwright was recommended by Latrelle Joy. Whether directly or indirectly, Joy has made clear to Conwright her adamant support of Zheng. That Conwright dared vote against Joy, even with an abstention, suggests courage in the making.

Aside from the mayor’s concerns there are those of Clowncilman Victor Hernandez. He’s unhappy that EUB members have spoken directly to LP&L employees. Victor, who is irrational in his support for Gary Zheng, is trying to give legal advice to the EUB. Read it this way, no board member should drink any Kool-Aid not mixed by Victor Hernandez and served by Gary Zheng.

image
A majority of the EUB acts like
No Evil Monkeys when it comes to Zheng.

More serious than any momentary hesitation on the part of Conwright is the refusal of the majority of the EUB, at last week’s meeting, to allow CFO Andy Burcham to report his findings to them about irregularities with E3 Consulting invoices. When it comes to Gary Zheng most of the Electric Utility Board imitates the no evil monkeys.

It may be that Mayor Robertson wants to know what his options are when the board is willfully ignorant about critical happenings within the organization.

Electric Utility Board
This time there is no excuse. It is on the EUB agenda for Burcham to inform the board in Tuesday’s meeting. Burcham has tried to protect himself from retaliation (he learned from what happened to Kyle Sparks) by emailing information of his actions to the city manager, EUB chairman and Dr. Zheng. That establishes him as a whistleblower and may give him the protection of Texas Whistleblower statutes.

In case you’re behind on city players the easiest description of Burcham is that he’s a Boy Scout. Impeccible integrity. And while some may dismiss Zheng’s long list of violations (see your picture above) no one can accuse Burcham of any agenda except the truth and his loyalty to the organization.

Zheng has lost the support of his entire management team.

One item on the EUB agenda is quite familiar:  Consider and take action regarding the appointment, employment, evaluation, reassignment, duties, discipline, or dismissal of the CEO/Director of Electric Utilities. Board member Clayton Isom told the Sandstorm Scholar that he is not going to back off his position that Zheng is not the person to lead LP&L into the future.

According to board members Charlie Dunn and Clayton Isom, Zheng has lost the support of his entire management team. His CFO bypassed him to take concerns directly to the FBI. After three months Zheng has so far failed to fill the #2 spot at the electric utility and he continues to be plagued by accusations of dishonesty.

We could not help but overhear Suzanne Blake at the last meeting excuse her vote to keep Zheng. Talking to another board member, she said, “I’m concerned about a motion that is so vague and potentially has some conflict in it.” There was nothing vague about Dunn’s motion and Blake hasn’t youth to excuse her inaction.

Blake has huge potential conflicts with any discussion of Sharyland or Tri Global Energy. She has already remained in a meeting without recusal during a discussion of both. Her behavior is ethically and legally questionable and her vitriol for certain other members of the board and general public is undignified. But, she serves Latrelle Joy’s purposes on the board and will probably remain for a while, imitating her mentor’s vacuous ethics.

Kudos to Matt Powell and his team.

One EUB member who voted “nay” to termination came to the Sandstorm Scholar after the meeting and indicated that Zheng’s departure was imminent but for him the timing last week wasn’t quite right.

Lubbock had better get ready for a half million dollar payoff to Zheng because he will be terminated and it will be without cause.

There are three reasons for that. First, “cause”, according to every attorney we’ve asked, refers to criminal behavior or extreme malfeasance. At this writing there has been no conclusive proof of criminal behavior on Zheng’s part. Second, the severance agreement is what a department of the city of Lubbock (LP&L) said it would do and a city, even after making an ill-advised agreement, ought to be in the habit of keeping its word. And just as significant, Zheng leadership is costing us hundreds of thousands of dollars.

For those whose preference is to fire Zheng with cause we’d warn there could be a long wait for proof of criminal behavior if any exists. With 2019 closing in on us we don’t have time to spare. Terminate him, pay him and wish him well.

The reader may find it an interesting footnote that Zheng’s wife, or at least someone with the same name and academic credentials, has been listed as part of the faculty of the University of Nevada since last fall.

District Attorney
Last in order but first in importance, Thursday, 34 year old Brian Suniga was convicted of the capital murder of David Rowser at One Guy from Italy Pizza in 2011. Criminal District Attorney Matt Powell prosecuted Suniga.

Amidst all of the petty news let’s not forget that there are dangerous, cold-blooded criminals in our city.

We’re fortunate that we have a CDA who takes crimes against citizens personally, treats victims with compassion and prosecutes criminals to the fullest extent of the law. Kudos to Matt Powell and his team.


This, that and the other…

We don’t serve your kind here
You can tell that Lubbock City Councilman Victor Hernandez is up for election: he’s trolling for Anglo demons and appears to feel he has found one in Attorney General Greg Abbott.

Hernandez resurrected an ugly theme when he castigated Abbott for holding a meeting at Jimenez Bakery in Lubbock last week. The message seemed to be: we don’t serve your kind here.

The fact is that General Abbott was graciously welcomed by the daughter of the restaurant’s owner and all kinds appear to be served at Jimenez Bakery.

Among other things, Victor takes exception to the gubernatorial candidate’s apologetic association with Ted Nugent. In this, of course, the councilman is correct.

A curse on all politicians who feel it necessary to pander to celebrity because they are famous…or infamous. That goes especially for sleazy rockers our parents hated when we were kids. This is a bipartisan problem in which politicos appear willing to ignore every value and principle they espouse if someone famous will endorse them.

Apologies all around
While the Mayor apologized to General Abbott for any insult, real or imagined, by Councilman Hernandez, he didn’t apologize to Dr. Gary Zheng last week.

The Mayor made several comments, all true, at last Thursday’s city council meeting about Zheng’s single-mindedness with regard to the power solution for 2019 and after.

Electric Utility Board Vice Chairman Jerry Bell responded by lecturing the Lubbock City Council. Bell, who just needs to be needed, made it clear he is a shill for LP&L staff when told the council with a quaking voice, “I feel like as a citizen of Lubbock I need to apologize to Dr. Gary Zheng and his wife and his family.”

“He’s sitting right behind you if you’d like to,” answered Mayor Robertson leaving Bell zinged on Zheng.

Councilman Todd Klein, whose star has never shined brighter than it has in the last three months, politely but firmly dismissed Bell and listeners were left reminded why Jerry Bell has twice lost his bid for public office.

Bids thrown out
The EUB rejected all bids for power generation this week. This is good news for Lubbock taxpayers. The irregularities of the handling of the RFP would likely have seen the project tied up in court for years.

Meanwhile AEG, the company recommended by Dr. Zheng and staff, is reportedly selling to NAES Corporation.


“He’s our sonofabitch”

A political lesson learned more than twenty years ago is as apropos today as it was then, particularly when the players on the field haven’t changed all that much.

The county chairman of political party was contacted by a city councilman and member of the opposing party for an informal meeting. Being young, naive and trusting of all involved he consented to the meeting. The councilman brought his best friend and partner-in-slime to the meeting.

The councilman’s friend was a candidate for judge running against a long time incumbent. The two laid their cards on the table: either the incumbent judge resigns or they would make public allegations of child-molesting against the judge. Even if false, the whisper of such a thing is every man’s worst nightmare.

The judge in question could have been accused of many things, but child molester? Not a shred of evidence.

The threat itself was arguably extortion however the only other witness was concerned for his own political future and declined to testify. The county chairman did the only thing he knew to do. He went to his mentor.

Jane Anne Stinnett quietly ruled West Texas politics. A nod or a glance from her could change the course of Texas politics and did more than once.

When she heard the story her her reaction was swift and resolute. She picked up the phone and called the judge and told him the story.

“All I want to know, Judge, is whether this is true?” The judge not only denied the allegations but he also filled in the blanks as to where the accusation came from.

A friend of the judge and his wife who had stayed in their home while in the midst of an acrimonious divorce and custody dispute was accused by his soon-to-be-ex-wife of molesting their children. The accusation was false and had had nothing to do with judge.

Jane Anne hung up the phone and counted the lessons on two fingers.

“First, I know you don’t like him, but the Judge is our sonofabitch. Until we find someone better, and the Councilman’s lying friend is no better, he stays our sonofabitch.”

“Second, don’t believe every accusation that comes out of a divorce. Desperate people will say anything for money and custody.”

Four years later Stinnett found a better candidate. The challenger won with integrity, hard work and without making a single false allegation and remains a fine judge to this day.

Yesterday, respected former judge and Lubbock city attorney Sam Medina announced that the had voluntarily placed himself on leave pending City Council action.

The release by his attorney, Rod Hobson, states that as part of divorce proceedings between Medina’s son, Erik, and Erik’s wife Angelina, Angelina has accused the city attorney of sexually assaulting her.

It is our understanding that these are historical, not contemporaneous accusations. Angelina’s attorney, Audie Reese, had not returned our call for comment at the time of publication of this article.

One question the Sandstorm Scholar would ask Reese is whether, as his licensing date might suggest, he failed his ethics exam or bar exam at least once prior to becoming licensed in December 2011.

For those having trouble connecting the dots here’s a little help.

First, like our incumbent judge two decades past, Sam Medina is ours. We don’t always agree with his rulings, but his integrity is above question.

Second, desperate people regularly make false allegations in course of divorce proceedings. Judge Medina has chosen to step aside as city attorney while these allegations are investigated. That is the appropriate course of action.

Finally, and we’ll add our own lesson to our mentor’s, not all the actors in this drama are evident to the public. It is probably nothing more than an interesting coincidence that a close friend and confidant of Councilman Victor Hernandez offices at the same street address as the accuser’s attorney. That incidental aside, the reader is well-advised to question the role of the background players.

glen_robertson_20140113There are forces on the City Council who would prefer a more malleable city attorney, arguably the most powerful city officer because his can be the final word interpreting the city charter.

We will all do well to withhold judgement and to allow the wheels of justice to grind on this issue.

Mayor Glen Robertson is rarely a word-smith, but his closing statement is the best we can offer in this situation: “There are few things as fundamental to our justice system as the presumption of innocence. That presumption is fully in place in this instance.”


Scorecard for Thursday’s City Council meeting

Today the Lubbock City Council will hold one of its most important meetings of the next thirty years.

It is item 6.6 on the agenda: Consider five appointments to the Electric Utility Board.

These five plus the four other EUB members will collectively influence what happens with Lubbock power generation. We say “influence” because the Lubbock City Council will have the last say in determining Lubbock’s future power generation.

Zheng is just a sideshow
From this point forward Gary Zheng is a sideshow. His fate is sealed whether he knows it or not.

When an employee starts showing up at meetings flanked by two attorneys, one criminal and one civil, he will not be able maintain his position and moral authority for very long.

That is particularly true if he’s a poor manager to begin with.

What matters now is the EUB, the tainted RFP process and what the board will do with the bid responses.

Mayor Glen Robertson said in his Tuesday news conference, “All bids should have been rejected. The CEO of LP&L should have been put on administrative leave.”

Todd_Kimbrough_20131104_0065705e
New General Counsel Todd Kimbrough.
You’d smile too with a $60k raise.

McDougal vote is the barometer
EUB members Gail Kring, Marc McDougal and Carroll McDonald are up for reappointment.

This is where you get out your scorecards and watch who votes how.

Even casual watchers of the EUB know that Marc McDougal has stood out as an advocate for transparency. He and Clayton Isom voted to fire CEO Gary Zheng.

McDougal and Isom were also the only votes against new General Counsel Todd Kimbrough’s $60,000 raise.

That’s right, sports fans, grandma can’t pay her electric bill but the Electric Utility Board voted to give it’s fumble-bumble but not too humble General Counsel a $60,000 raise.

That’s a 40% pay increase if you’re scoring it. Other people’s money spends freely.

Any Council member who votes against McDougal is voting against transparency, for higher salaries at the power company and for a novice to build and operate Lubbock’s power generation for 2019 forward.

What the program doesn’t tell you is that McDougal doesn’t march to LBJ’s agenda. Or anyone else’s for that matter. Her agenda includes protecting Gary Zheng and his plan for 2019.

It doesn’t matter whether you like Marc McDougal or not, the proof is in the doing and right now he is leading the way against the tainted bid process and suspect recommendation.

The last time we had an unlikeable rich guy running the EUB he pulled it back from the brink of bankruptcy.

The only opinion that matters is Medina’s
Don’t be fooled by pious protestations of conflicts from the dais.

If Latrelle Bright Joy (or any other member makes a speech) about McDougal’s conflicts rather than waiting for the city attorney to rule remember that Medina’s word to clear her was good enough for her when she was taking what Glen Robertson called “subtle bribes.”

It was Medina’s ruling that triggered the vote on Dwight McDonald. The legal reality is this: the only opinion that matters is Medina’s.

Carroll McDonald voted
for Kimbrough’s $60k raise.

Kring and McDonald also up for reappointment
Gail Kring is also up for reappointment. As EUB Chair Kring works closely with General Counsel Todd Kimbrough.

Mayor Robertson speculated publicly that Kring and General Counsel Todd Kimbrough charged the investigator from Andrews Kurth with conducting what Robertson called “an $80,000 whitewash.”

Kring voted for the $60,000 raise for Kimbrough. He has consistently demonstrated lackluster leadership. A vote for Kring’s reappointment is a vote to continue the status quo at LP&L.

Likewise Carroll McDonald. He too voted for Kimbrough’s raise and he did not support McDougal and Isom in the vote to terminate Zheng.

Two new appointments – watch LBJ
Watch who is newly appointed and who drives that process.

More Latrelle Bright Joy cronies (LBJ looks to former Mayor David Langston for her marching orders), will not be good for the EUB or the citizens of Lubbock.

image
Councilman Jim Gerlt will
be a key player to watch.

Gerlt can be a pivotal player
The key players in this drama will be Floyd Price and Jim Gerlt. Price has often been a swing vote. He is often independent.

More interesting at this juncture is Councilman Jim Gerlt. He has shown encouraging signs in recent television interviews.

We each have different issues that push our outrage button. Gerlt appears outraged at several things happening right now.

Watch Councilman Gerlt. He may well be the deciding vote on several of these appointments or reappointments. If he shows a little righteous indignation here the citizens of Lubbock will benefit.


News & commentary: When does an electric company need a plumber?

Counsel hired to find conflicts, then conflicts out
According to Lubbock Power and Light spokesman Matthew Rose, LP&L General Counsel Todd Kimbrough was contacted by Andrews Kurth LLP, the law firm hired to investigate RFP irregularities. Andrews Kurth was informed by City Attorney Sam Medina that the city of Lubbock considers their work to be a conflict.

Andrews Kurth is bond counsel to the city of Lubbock. Bond counsel is lucrative business that makes law firms far more than the $75,0000 to $100,0000 earned in the “investigation” of the LP&L RFP process.

City Attorney Sam Medina would not comment because he had not yet spoken his client, the Lubbock City Council.

Rose said that he was told whoever comes in behind Andrews Kurth will be able to use the work already done and write a report.

Really? The investigator has a conflict but LP&L is still going to use his work? Who made that decision?

Investigator or plumber?
“Continuing a faulty and tainted investigation is as ludicrous as continuing the current RFP process. I cannot imagine what they are thinking at LP&L,” said Mayor Glen Robertson.

We agree with Robertson. The investigator was looking more like a plumber than an investigator.

Perhaps this is appropriate for someone coming out of Washington, D.C., but it isn’t what the Electric Utility Board authorized in open session.

“I felt like I was witnessing an $80,000.00 whitewash.” Mayor Glen Robertson

It was during the Nixon Administration that the term “Plumbers” was used of a covert White House group put together to investigate leaks in the administration.

The White House Plumbers plugged leaks to the media about activities the administration did not want the general public to know about. Nixon needed plumbers because he had lots to hide.

Is that what’s happening here?

The first hint came in our conversations this week with LP&L CEO Gary Zheng. Zheng seemed unconcerned about Alpine Energy Group’s lack of experience in project development, however he was very concerned about where we had obtained our information.

“Where did you get this information?” Zheng asked repeatedly.

Mayor Robertson’s comments seem to confirm our suspicion that the investigator’s mission was to find and stop the leaks.

“After meeting with the attorney hired to investigate the ongoing RFP, I am convinced that the attorney had been instructed to defend to process, not investigate it,” Robertson told the Sandstorm Scholar Friday.

If the investigator was actually a “plumber”, assigned to stop the leaks, it gives context to Gary Zheng’s comments about disagreement in the EUB executive meeting we previously reported. Apparently some on the EUB questioned the wisdom or need for a staff driven investigation.

Perhaps this is why, after his interview with the investigator, Mayor Robertson told the Sandstorm Scholar, “I felt like I was witnessing an $80,000.00 whitewash.”

Our sources tell us the investigator was concerned about who was talking to the Sandstorm Scholar.

That seems a strange approach to take to an investigation of RFP irregularities.

If a plumber is needed, one must wonder if he’s there to protect staff or some of the members of the EUB? Is there something to hide?

Chairman Gail Kring and new General Counsel Todd Kimbrough were responsible for hiring outside counsel.

kring-abeyta-kimbrough_20131016_0065668
EUB Chairman Gail Kring,
Vice-Chair Emilio Abeyta and
General Counsel Todd Kimbrough.

Has Todd Kimbrough earned a $50,000 raise?
Todd Kimbrough must have impressed someone on the EUB. On the job less than two months, Monday the board will discuss giving him a $50,000 raise.

It seems Kimbrough has gotten a better offer elsewhere.

Perhaps he should take it.

Several EUB members have said privately they will not vote for a raise.

Did Gail Kring disclose PYCO contract?
It is Gail Kring’s company, PYCO, that has an agreement with LP&L. A city of Lubbock employee told us yesterday that the contract is a wheeling agreement.

A wheeling agreement would have PYCO paying LP&L to transmit power from one location to another. In this instance, possibly from the windmills on east 50th street to another PYCO location.

The significance of the wheeling agreement is that we understand it is disallowed under LP&L’s 2006 power purchase agreement with Xcel Energy. It is possible an agreement that pre-dated the Xcel agreement could have been grandfathered and be an exception to that restriction.

PYCO is a cooperative and while its President, Gail Kring, may own stock in the cooperative, it is unlikely that a wheeling contract creates a conflict. But we’ll not know until the contract is produced.

The real issue here is disclosure. Did EUB Chairman Gail Kring disclose PYCO’s contract to the City Council?

EUB to meet Monday
The EUB meets Monday, November 4 at 2:00 p.m. There are four items on the agenda for discussion in the regular meeting. We’ll skip the legalese and offer our interpretation of those four items:

1. Adopt a rate stabilization plan (good to see the lights are on somewhere).
2. Vote to give its new general counsel a $50,000 raise (maybe he’ll hire a better plumber if he’s paid more).
3. Evaluate Gary Zheng’s employment status (i.e., how much prevarication will the EUB tolerate?).
4. Hire another plumber (and hope he’ll follow the same game plan given the last one).

When does an electric company need a plumber? Only when it has something to hide.


Notes from our conversation with Dr. Gary Zheng

CEO and Director of Public Utilities Gary Zheng is a frustrated man.

We have been critical of Dr. Zheng, but we are also sympathetic with his exasperation and want to treat him fairly. The best way we know to do that to report as much of what he said as possible.

Here are our notes from our two conversations with Gary Zheng this week.

 

•One of Zheng’s greatest sources of frustration is the public clamor over LP&L electric rates.

LP&L September rates were some of the lowest in the state. About 3% higher than San Antonio but 10% less than Amarillo (Xcel Energy).

Click to enlarge comparison of LP&L Sept. rates.
Click to enlarge comparison
of LP&L September rates.

“Why do people criticize us when we have the lowest rates in the state?” asked Zheng.

 

•What makes LP&L bills so high is, in part, the water, sewer and garbage charges included in the bill.

“If I managed electricity the way that the city manages water we would have the highest rates in the state,” said Zheng.

While that’s an apples and oranges comparison it is true that Lubbock’s water rates are very high.

It is also true that we live in a semi-arid climate where water is scarcer and must be transported over long distances. Lake Lubbock, if it ever existed, dried up a long time ago.

When talking with Zheng it becomes clear that he carries a good deal of resentment for the confusion that results from having to bill for water, sewer and garbage along with electrical power.

 

•AEG’s bid is $20 million/year lower than the next highest bid.

Zheng told the Sandstorm Scholar that if opponents are successful in preventing AEG from winning the bid that it will be costly to the city. “You are going to cost the $20 million a year,” Zheng said of the Sandstorm Scholar’s reporting. “That is how much difference between lowest bid and next higher.”

That assertion assumes the lowest bid is the best bid and that change orders and add-ons do not create cost overruns. That is always the danger of going with a lowest bidder.

This is where it is important to review the experience, references and and resume of the bidder. Track record is critical, if the bidder has one.

 

•In executive session some board members argued against hiring an outside investigator, according to Zheng.

When he spoke with us, Zheng mistakenly thought that there were votes against that motion in the EUB meeting. The vote was unanimous. He was certain however, that some members argued in closed session against the move.

 

•PYCO, the company headed by EUB Chairman Gail Kring, has a contract with LP&L.

As a result of our conversation with Zheng we have requested a copy of that contract.

According to Zheng, the contract is for electrical power and was signed prior to Kring joining the Electric Utility Board.

This is interesting since Dwight McDonald was booted from the board because of his contract with the city of Lubbock. Mayor Glen Robertson publicly scolded McDonald for not disclosing his potential conflict at the time he was appointed to the EUB.

This raises questions about whether Gail Kring disclosed the potential conflict to the city when he was appointed?

Will the City Council consider that potential conflict when voting on Kring’s reappointment? Will it ask for the city attorney to opine as to Kring’s eligibility just as was done with McDonald?

In light of recent events with Dwight McDonald and questions about Carroll McDonald and Marc McDougal, isn’t it reasonable to expect that EUB Chairman Gail Kring has made a full disclosure of the matter?

Questions also arise as to exactly what is contained in that contract. PYCO owns several windmills along east 50th street. Is the contract to buy, sell or wheel electricity?

 

•Zheng’s confidence in AEG is based upon the fact that it’s funder, it’s “bank” if you will, is an experienced firm that has underwritten or financed many projects like this for companies other than AEG.

That company is Energy Investors Funds (EIF).

“They have over 100 people who do this all the time,” said Zheng. It is not clear exactly what EIF’s role in the transaction would be since, according to Zheng, they are not the bidder.

This too raises questions. How does the credibility of the funder, who is underwriting a project based on the creditworthiness of the city of Lubbock, lend expertise and experience to a project developer who has none?

Is EIF a part of the bid proposal? Are they a guarantor or bonding agent for the bid?

 

“…there are some people who want to kill this thing. I think potentially they may financially benefit. They may personally benefit from it.”

•Dr. Zheng accuses at least some who question him of having indirect motives.

Zheng said of the Sandstorm Scholar, “You reporting this is discrimination.” CEO Zheng feels that he is being “singled out” for criticism.

Dr. Zheng also made this statement in the context of questions that should be directed at EUB members Marc McDougal, Clayton Isom and Mayor Glen Robertson, “I hope you will keep in mind, there are some people who want to kill this thing. I think potentially they may financially benefit. They may personally benefit from it.”

Those are serious allegations. We will continue to investigate.


Zheng accused of allowing favored vendor to write RFP

Zeng reportedly admits to meeting with only one of five top bidders then recommending that bidder to the EUB

Sandstorm Scholar sources have told us that Lubbock Power and Light CEO Dr. Gary Zheng acknowledged allowing Alpine Energy Group (AEG) to write the RFP for power generation for Lubbock for 2019 forward.

AEG is one of the bidders for the purchase power agreement considered by the LP&L Electric Utility Board. Zheng allegedly allowed AEG to write all or most of the RFP.

image
LP&L Director of Electric Utilities Dr. Gary Zheng

When confronted with the allegation in EUB closed session last week Zheng reportedly first denied this, then later came back to the board and said he had forgotten but that he had allowed AEG to write the RFP.

Gary Zheng did not return Sandstorm Scholar phone calls for comment on this story.

In open session today, on Vice-Chairman Emilio Abeyta’s motion, the EUB voted to allow Zheng to continue in his position as Director of Electric Utilities for LP&L. EUB members Marc McDougal and Clayton Isom were the only dissenting votes.

“Zheng allegedly allowed AEG to write all or most of the RFP for future power generation.”

Zheng also allegedly admitted under questioning from the EUB that he attended only one of the five meetings with top five bidders for the purchase power contract. That meeting was with AEG.

Despite having met with only one of five top bidders for the contract Zheng reportedly ranked the bidders himself and made the recommendation to the EUB for AEG to be awarded the bid.

Mayor Glen Robertson
Mayor Glen Robertson

Sources tell Sandstorm Scholar that Zheng has acknowledged all of the above to the EUB.

We also contacted Mayor Glen Robertson who said, “I cannot comment on this story due to pending litigation against me by LP&L employees.”

Sources tell us that Zheng and LP&L Assistant Director Dale Stephens have both threatened to sue Mayor Robertson.

The Sandstorm Scholar previously reported that the FBI is investigating allegations of bid rigging at LP&L.

In other developments at Wednesday’s EUB meeting, in open session board members voted unanimously to have a Houston based international law firm of Andrews Kurth, LLP to investigate allegations of bid rigging at LP&L. It also voted to take no action on bids for future power generation at this time.


Analysis and commentary: What’s going on at LP&L?

What we know…
Electric Utility Board members Marc McDougal and Clayton Isom have called for a special meeting of the EUB for Wednesday at 9 a.m. and in the process overruling EUB Chairman Gail Kring who refused to call a meeting on his own initiative. The controversy at LP&L seems to quickly be coming to a head.

There are three items on the agenda for Wednesday:

  1. Discuss procurement of electric generation beginning in 2019.
  2. Investigation regarding alleged improper generation procurement activities & retention of outside counsel.
  3. Deliberate the appointment, employment, evaluation, reassignment, duties of a public officer or employee (Director of Electric Utilities).
EUB members Marc McDougal
and Clayton Isom

This is explosive. Before we start reading between the lines let’s review what else we know for certain.

Marc McDougal told the Sandstorm Scholar that on Thursday he asked Gail Kring to call a special meeting of the EUB to ask for an investigation of the purchase power agreement bid process.

McDougal said Kring refused to call a meeting. Kring could not be reached for comment on this story and did not return our calls.

We contacted EUB member Clayton Isom and he confirmed that he also called for a meeting by communicating with EUB General Counsel Todd Kimbrough. EUB rules allow that two members can call a meeting at any time with proper notice.

We understand that allegations of potentially unlawful misconduct were made in the Thursday October 17 meeting. Those allegations include the possibility of bid rigging in the purchase power agreement RFP process.

How serious is this crisis? Mayor Glen Robertson said it this way, “If all of the allegations are true, people could go to jail.”

In our news links you will find a story on EverythingLubbock.com.

What we think we know…
Here’s our best effort at the interpretation of the agenda: The EUB is going to look at the bids for power generation procurement and table or reject all of them because of the allegations of impropriety, then retain outside counsel to investigate how widespread the improper dealings are, if any exist.

It appears that EUB members have heard enough that at least two believe there is sufficient evidence to warrant a discussion of the demotion, suspension or firing of CEO Gary Zheng.

Now, all or none of this may happen on Wednesday but it is clear that at least two of the members of the EUB, McDougal and Isom, want to get to the bottom of this.

Director of Electric Utilities Gary Zheng may not survive the meeting. If he does, don’t be surprised if Dr. Zheng is placed on administrative leave until the investigation is complete.

What we want to know…

kring-abeyta
EUB Chair Gail Kring &
Vice-Chair Emilio Abeyta

Why did the Chairman of the EUB refuse to call a meeting to root out allegations of corruption at LP&L? Gail Kring apparently didn’t want to know the truth badly enough to do the right thing. He was forced by members McDougal and Isom to call a meeting.

Hiding his head in the sand and neither asking nor answering questions is one more indicator of weak leadership on Kring’s part.

Who will attend the meeting? Perhaps more to the point, who will choose to not attend the EUB meeting? Board members who want to stall an investigation or delay difficult personnel decisions may choose to absent themselves from Wednesday’s meeting.

We asked Mayor Glen Robertson if failure to attend the meeting in an attempt to thwart a quorum was cause for removal from the EUB. Robertson responded, “It would be for me.”

The public may be able to tell some of the good guys from the bad guys by who has an unexcused absence on Wednesday morning.

How deeply is Councilman Victor Hernandez involved in all of this? Other than the Mayor, who is an ex officio member of the EUB and who has been openly critical of the board, Hernandez has been the Council member most active in LP&L’s business issuing personal white papers with suggestions for solutions to LP&L challenges and even coordinating his releases with LP&L news conferences in the past.

The Vice-Chairman of the EUB is Hernandez’ close friend and confidant, Emilio Abeyta.

Could this reach as far as members of the LP&L board or the Lubbock City Council? “There is the potential for a lot of involvement and an investigation needs to cast a far and wide net,” said Robertson, who made no specific accusations.

Is there an FBI investigation of LP&L? Mayor Robertson’s “I can neither confirm nor deny” answer to our direct question about an FBI investigation is standard federal-speak for “Yes, but they told me not to talk about it.” Add that to his “people can go to jail” comment and what you have are allegations of criminal behavior being investigated by law enforcement.

What kind of business does the Director of Electric Utilities have outside the country? Two weeks ago, when Gail Kring sent the memo from general counsel to EUB members we were told by staff that Zheng was out of the country on business. There is probably legitimate business to be done but we’d like to know what it is. Or, staff may have been misinformed and it may not have been a business trip after all.

And probably most important, what is Dr. Zheng’s role in the alleged bid-rigging? If bid rigging exists it would almost necessarily involve LP&L personnel at the highest levels of management.

There are many more unanswered questions. The Sandstorm Scholar has submitted a Public Information Act request for Zheng’s travel, email and phone records. Those may tell us more when and if and when they are turned over.