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State attorney denies ‘whitewash’
BY LISA ZAHNER - STAFF WRITER (Week of January 1, 2010)

The eight-week investigation into the City of Vero Beach electric utility cherry-picked people to interview, failed to independently verify information offered by top city staff and their consultants, and wrote a final report that mirrored the city’s own language in justifying its actions.

The State Attorney’s Office closed the investigation on December 16, although Assistant State Attorney Tom Bakkedahl said that while investigators found nothing criminal, it could choose to reopen the probe if more information surfaces that points to such acts.

Bakkedahl bristled at the suggestion that the probe had been merely perfunctory.

“The last thing I want is for this investigation to be viewed as a whitewash by the State Attorney to cover up for anyone at the City of Vero Beach,” said Bakkedahl. “It is our job to look for criminal activity and we found nothing criminal here.”

Bakkedahl said it is not within the jurisdiction of the State Attorney to delve into things that might be civil matters or even matters that citizens or taxpayers would fi nd egregious, but not criminal.

“I want to be clear, nothing ever is really closed,” he said. “Should further information come to light that is relevant, we would look at that.”

A review of the investigative records – now public since the probe is closed — shows a single investigator documented his questioning of a total of eight people, including City Manager Jim Gabbard, former Electric Utility Director R.B. Sloan, consultant Sue Hersey, attorney Meabh Purcell and four Florida Power & Light employees.

Topics of questioning included who had access to the contract; when and how the bid criteria was developed; whether or not anyone thought it was weighted against FPL; and whether or not the contract with Orlando Utilities Commission was altered after it was approved by council.

Records from the investigation show that investigator Ed Arens meticulously wrote down all the responses to basic questions, but the reports don’t refl ect the asking of follow-up questions at a later date based on subsequent research or the interviewing of witnesses with potentially differing viewpoints.

Arens collected several hundred pages of documents, but his reports do not indicate that he independently reviewed those documents.

The final memo reporting on the investigation is little more than a parroting of the staff’s answers and Powerpoint presentations and “white papers” published by the city and its consultants to justify the decision to keep the power plant and to go with OUC.

Bakkedahl said that the public records amount to an “outline” of the investigation and might not refl ect all the people who were questioned or all the questions that were asked. He admitted that city staff was most likely used as a source for information contained in those reports, especially the ones written in the early stages of the investigation.

Bakkedahl said the city’s hired consultants were viewed as independent actors who provided a perspective from outside City Hall, despite the fact that they were paid millions to negotiate the deal by the city and the bidding process and the contract were both the product of the consultants’ work. City Council members who approved the contract were not interviewed because it was seen as unnecessary.

“After we talked to the consultants who were there and who told us that they had these meetings with each City Council person and reviewed the contract and made their presentations, what information would the City Council members have been able to add to that?” he said.

The investigator on the case, Arens, is also a retired city of Vero Beach police offi cer who collects a pension from the city. When asked whether that could potentially create a confl ict of interest, Bakkedahl said he would “stake his life” on the fact that Arens conducted a fair investigation.

“The truth of the matter is that once our investigators come to work with Bruce Colton, their loyalties lie with the State Attorney’s Offi ce,” he said. “Ed Arens would in no way fudge something on an investigation due to false loyalty to a former boss.”

It began with a citizen complaint

The investigation launched in late October after a seated member of the county’s Grand Jury — the anonymous citizen — wrote a letter asking pointed questions about the electric utility.

“I understand that the State Attorney’s Office has a lot of work to do and that the Grand Jury didn’t volunteer to take on this issue, but I think it is important that somebody with authority look into this matter,” the letter states.

“We are talking about hundreds of millions of dollars that are at stake as well as constitutional issues. These are not trivial matters,” the grand juror continues.

The letter requests the State Attorney investigate six allegations that the grand juror had seen or heard in the media. The juror was concerned about reports that City Council members did not see the complete power contract prior to its approval and that council members relied on consultants to make decisions.

The juror asked, “Who were these ‘consultants’ and what were their motivations? Whose interests did they represent? The utility, the city employees, the taxpayers of the city, the county customers, the City Council?”

The citizen also asked how and why the city negotiated an up to $50 million penalty in the OUC contract and why the city did not speak with FPL about selling the electric utility.

A small investigation in a very small town

The investigator assigned to the case is a retired Vero Beach police offi - cer who once worked for City Manager Jim Gabbard while Gabbard served as police chief before becoming city manager in 2005. In addition, Gabbard has worked as special investigator for Colton’s offi ce and the two men worked closely on cases.

Despite the connections between the investigating agency and the city, at no time did the State Attorney’s Offi ce consider asking another offi cer to conduct the investigation, said Assistant State Attorney Chris Taylor who handles Indian River County.

“Investigator Arens is a professional person and a professional investigator. There was never a feeling that he would not be impartial enough to do the investigation,” Taylor said.

Taylor said that he, Colton and Bakkedahl reviewed the reports submitted by Arens and a presentation based on Arens’ fi nal report was made to members of the grand jury on Dec. 16.

Taylor said there are no public transcripts available of the proceedings, as any testimony given before the grand jury is sealed and secret.

FPL employees interviewed, hands tied by bid documents

But just how deeply the investigation went remains questionable.

On Dec. 4, Arens met with FPL Staff Attorney David Lee, Senior Power Originator Edward Tammy, Energy Marketing and Trading Manager Tim Gerrish and Treasure Coast Area Manager N.L. Blount.

FPL staffers said that the bidding process was “uneventful” and that “all questions regarding the negotiations were channeled through Sue Hersey, the city’s hired consultant.” FPL staffers said they had several meetings with Hersey and city electric staff and that “The City of Vero Beach provided all the information and answered any questions that were asked by the FPL negotiation team.”

Arens asked FPL representatives, “Did you ever get the impression that the bidding process was arranged to provide an unfair advantage to one of the other bidders?” and recorded the FPL answer as follows:

“No. No one from the Florida Power and Light negotiating team indicated a belief that Florida Power and Light was placed in an unfair advantage.”

Arens stated in his summary report dated Dec. 16 that “none of the bidders knew what the city was using to make its decision.”

Even if the FPL negotiating team did feel — based on what little they knew about how the bids were evaluated — that they were at an unfair disadvantage, they legally would not have been permitted to make that claim, to the State Attorney or anyone else, as it could have been construed as a protest.

It is unclear whether Arens knew that all bidders, including FPL were restricted by the bid documents from mounting any kind of protest of the decision.

Big questions were not asked

At no point in the investigation was anyone asked whether or not they were ever asked or instructed to choose a certain bidder. More importantly, the players involved in the bid process were not asked if they were ever instructed — either directly or indirectly — not to choose Florida Power and Light.

Bakkedahl said that even if employees who rated the bidders were told not to choose FPL, that in and of itself, without other evidence of bid-rigging, would not necessarily be criminal.

No one was asked if the people involved in the process felt pressured to make a decision which would keep the city in the electric business in order to preserve jobs and the revenue stream — $6 million plus $2 million in administrative fees — which the electric utility contributes to the city’s general fund each year. That also would not be a crime.

Despite the findings, the basic questions asked by the anonymous grand juror remain.

“I can’t think of anything more important than determining whether there has been incompetence, laxity or even unlawful acts on the part of elected offi cials or the city’s institutions or whether the citizens’ rights of non-city customers are being protected. It’s our duty,” he or she wrote in the original complaint.