Senator Jennifer Beck

Rudderless BPU Hurts Consumers

Senator Jennifer Beck, a member of the Senate Judiciary Committee sent a letter to Governor Jon Corzine today asking him to withdraw his re-appointment of Jeanne Fox to the Board of Public Utilities (BPU). The BPU is the regulatory agency that sets the rates consumers pay for electricity, natural gas, water, telecommunications and cable television. The letter is attached.

“Upon learning of the decision of the trial court judge to delay hearing a whistleblower lawsuit brought against BPU president Jeanne Fox it became obvious that the governor should withdraw his nomination of Jeanne Fox and move quickly to submit a more qualified alternative to the Judiciary Committee. The BPU will need strong leadership this year to ensure that consumers in New Jersey are protected from exponentially increasing energy and water costs and President Fox in exceptionally ill-equipped to provide that leadership.

“Given her record of gross mismanagement, I am baffled by the governor’s decision to nominate her. The history of hidden bank accounts, criminal investigations, scathing audits and the whistleblower lawsuit should have immediately prohibited her from consideration for this post. I strongly urge the Governor Corzine to rectify this mistake and seek a qualified nominee for the Senate’s consent.”

The BPU sets the rates for 47 water utilities, 20 sewer utilities, 10 municipalities, 9 cable providers, 5 electric companies, 4 gas companies and 2 telecommunications/phone providers.
May 20, 2008

Hon. Jon Corzine

Governor, State of New Jersey

P.O. Box One

State House

Trenton, New Jersey 08625-0001

Dear Governor Corzine:

I am writing to request that you withdraw the reappointment of Jeanne Fox as a member of the Board of Public Utilities (the Board) and submit a new nomination. Soaring energy costs and the development of a far-reaching energy master plan make it essential that we have a Board member and President who can focus all his or her time and energy on developing policy – without being distracted by scathing audits, dual criminal investigations, and a whistleblower lawsuit.

As you know, the Senate Judiciary Committee is refraining from reviewing Jeanne Fox’s reappointment pending the outcome of a whistleblower lawsuit. This lawsuit is not scheduled for four more months and will drag on until at least October - possibly much later. At that time, a jury will decide whether the Board, Jeanne Fox, or other officers retaliated against a Board employee who identified problems at the Board. It will certainly be enlightening to hear sworn testimony about Board mismanagement and to obtain a jury decision as to whether a conscientious Board employee was retaliated against for bringing mismanagement to light. However, regardless of that trial, there is ample evidence that the Board of Public Utilities has been grossly mismanaged over the past six years and reappointment of President Fox is not warranted.

I encourage in the strongest possible terms to withdraw this nomination and work to find a suitable alternative. I am confident that you will find a nominee who will competently perform Board responsibilities on behalf of ratepayers and put the last five years of mismanagement to an end.

      Sincerely,

Jenifer Beck

District 12

enc.

Major Concerns with Jon Corzine’s Reappointment of Jeanne Fox to the BPU

1) Treasury Audit

An audit performed by the Department of the Treasury dated December 8, 2004 was the catalyst for subsequent audits and investigations. That audit first exposed how funding for BPU grant programs was funneled through an unlawfully established bank account with Wachovia. The account was outside the State accounting system in violation of Office of Management and Budget circulars. The account was accessible only by Jeanne Fox and several other staff at BPU.

Aside from focusing on the unlawful Wachovia account established outside the accounting system, the audit exposed: how grants were awarded outside established treasury circular letters (page 6); files and procurement records were shredded, destroyed, and lost (pages 9 and 12); cronyism was rampant with grant awards (pages 10, 11, 14, and 16); reporting and oversight was irregular and inadequate (pages 15 and 16); and potential conflicts of interest were littered through grants and contracts (pages 21-23.)

2) State Auditor’s Audit

The State Auditor found that prior to 2005, the financial transactions of the Office of Clean Energy (OCE) relating to the Clean Energy Program were undertaken by a bank, which acted as the fiscal agent to manage renewable energy funds and disburse them. These transactions were not reflected in the State’s accounting system in violation of various Office of Management and Budget (OMB) circular letters. (Page 2)

The State Auditor also found that records critical to the evaluation of proposals relating to the 2003 awarding of $2.7 million in Clean Energy Program monies “were no longer available,” and that as a result, the Auditor was unable to “verify that decisions were made in evaluation process that were fair, unbiased, and were merited based upon scoring procedures established by the OCE. This failure to maintain records violated Treasury Circular Letter 06-16-DPP, which requires State agencies to maintain documentation that contracts were awarded in a competitive process. In addition, all documents related to the solicitation and award of the contracts should have been retained for seven years. (Page 3)

The Auditor also found that three of the nine grantees in 2003 received initial payments that were between 33 percent and 50 percent in excess of the stipulated grant agreement. The OCE did not maintain adequate monitoring controls to ensure that grant terms and conditions were being completed as required. (page 4)

The State Auditor also determined that the OCE undertook transactions with individuals who had a relationship with the office, including individuals who were former BPU employees. The auditor found that there were no clear policies to ensure that these transactions were being done at arms length. (page 4)

Whistleblower Suit

Joe Potena, a former BPU Chief Financial Officer (a more than 20 year career public employee who lives in Pennsylvania and is not politically active) filed a whistleblower lawsuit in 2005. He alleges that after he raised concerns about financial irregularities, Jeanne Fox, two other political appointees at the BPU, and the board itself retaliated against him by harassing him and taking away his responsibilities and authority.

Then Attorney General Peter Harvey approved the retention of four politically connected law firms to represent the defendants. Angelo Genova’s firm, Jim Florio’s firm, and the law firm of the former head of the State Bar Association (Carol Corbin Walker) were all hired. They have billed the taxpayers more than $1 million for work associated with the lawsuit.

More than a dozen depositions were taken of the whistleblower, his wife, and his medical doctor in what appears to be a strategy of delay and embarrassment. Inappropriate and irrelevant questions were asked at depositions, including questions of an intimate nature and the personal habits of the whistleblower, his wife, and his children.

After three years of discovery and what can only be considered poor treatment of a conscientious employee, the trial is about to commence in Mercer County Superior Court.

Criminal Investigations

BPU has acknowledged receiving at least one subpoena from the Attorney General’s Office. The New Jersey Division of Criminal Justice has been investigating, and as far as anyone knows, the investigation is still ongoing. No one is known to have received a “target letter” or been indicted.

News reports have indicated at least one Federal investigation has been undertaken, but it is unknown whether such an investigation is ongoing.

Patronage Hiring

Staffing at the BPU has risen dramatically in the past four years, and a number of staffing decisions raise serious questions. Filled staffing levels have increased from approximately 263 as of six years ago to in excess of 300 as of 2007. Many of the hires have been government representatives or public information officers as opposed to licensed professional staff. Under Governor McGreevey, six aides (including an aide to, and relative of, Golan Cipel) moved directly from the Governor’s Office to jobs at the BPU. A $36, 000 aide to McGreevey was transferred to BPU as a $65, 000 assistant secretary. Another McGreevey aide moved from a $45, 000 position in the Governor’s Office to a $65, 000 communications position at BPU. A review of resumes indicates more than a dozen other patronage hires including candidates for legislative office and campaign operatives – all while employees with professional qualifications to review proposed rate increases were almost never hired.

Excessive Global Travel

The travel practices of the Board, as reported by the Asbury Park Press and as evidenced in receipts and reimbursement information, can only be described as excessive and obscene. Hundreds of thousands of dollars of trips around the world have been taken by Commissioners to Africa, Europe, Asia, North and South America, and Australia. One commissioner even stayed in a hotel room that cost more than $600 per night. Another commissioner, over the course of a three year period, devoted more than 270 days to travel to: Latvia, India, Philippines, Romania, Nova Scotia, Mali, Australia, Azerbaijan, Hungary (three times), Belgium, Slovakia, Bulgaria, Ethiopia, Trinidad, Italy, the U.S. Virgin Islands, and ten states including eight separate trips to Florida. He accrued more than 80, 000 frequent flyer miles – enough for a first-class round-trip ticket to Australia or two-round trip tickets to Hawaii. While some of these trips are paid for by associations, those same associations have received an increase in dues from the BPU of more than tenfold in the past few years. Total annual dues were less than $20, 000 prior to 2002, while total annual dues have been in excess of $500, 000 for the past several years. The trips, either directly or indirectly, are paid by New Jersey’s ratepayers

Link to Post:

http://www.senatenj.com/index.php/beck/beck-dump-jeanne-fox-now/504