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Archive for August, 2010

Apparently too much time has passed for the state to bother prosecuting those responsible for the illegal use of $2.6 million in Grambling State University facility support funds to invest in the stock market. The investments, according to a state audit of GSU, resulted in a loss of about $1 million.

Even though the audit report said the use of facility support funds for stock investments was clearly in violation of the law, Louisiana Inspector General Stephen Street has decided not to open a formal investigation.

“….(I)t appears that these stock purchases occurred between 2002 and 2004,” said Greg Lindsey, state audit director for the IG’s office. “Inspector General Street felt that these violations are too stale-dated and that full development as a criminal matter would be restricted by state and federal prescription periods. Therefore, after careful consideration, we have decided not to open a formal investigation.”

“We noted that various corrective actions were implemented by GSU, including transferring the stock instruments to a custody account,” Lindsey added in his letter to Louisiana Voice.

Taking into consideration GSU’s track record of repetitive financial accounting shortcomings over the past 40 years, we’re going to take a wait-and-see approach to those “corrective actions.”

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State Sen. Francis Thompson is not only the family employment champion among state lawmakers (a news report from the 1980s claimed that he had more relatives on the state payroll than any other member of the legislature) but he also appears perfectly capable of siphoning off millions of dollars in state revenue for pet projects. Those projects primarily include ground water reservoirs in more than a dozen parishes costing taxpayers more than $163 million since 1997.

In a state teeming with hundreds of lakes and reservoirs while reeling from dwindling tax revenues, Sen. Thompson has managed to convince fellow legislators and three governors of the necessity of constructing even more. With the passage of each piece of legislation to appropriate funds for a new reservoir Thompson’s brother, former Delhi mayor Mike Thompson, secured a $100,000 per year consulting contract from the Louisiana Department of Transportation and Development (DOTD). That’s $100,000 per year per reservoir project.

Mike Thompson earlier this year was sentenced to 18 months after having been found guilty of one count of using district employees to work on his home in Delhi and charging the Poverty Point Reservoir District for the labor in violation of the Hobbs Act. The Hobbs Act was enacted by Congress in 1951 to combat racketeering in labor-management disputes but is often invoked in cases involving public corruption. He could have been sentenced to up to 20 years in prison and prosecutors did argue for a sentence of 41-50 months. He was scheduled to report to prison on Monday of this week.

Francis Thompson’s older brother, Clyde Thompson, currently employed as executive director of the Madison Parish Port Commission at $49,207 per year, once served as second in command to DOTD Secretary Paul Hardy during the administration of former Gov. Dave Treen.

Monroe engineer Terry Denmon just as consistently was awarded engineering contracts for each of the reservoir projects undertaken. His contracts ranged from $200,000 to more than $700,000. Like Francis, Mike, and Clyde Thompson, Denmon is a graduate of Louisiana Tech University in Ruston and as recently as 2007 was chairman of the Louisiana Wildlife and Fisheries Commission.

None of the reservoir projects has proved as expensive to the state and profitable—and troublesome—to the Thompsons and Denmon as the centerpiece of all of Francis Thompson’s reservoirs, Poverty Point Reservoir in Richland and Madison parishes. That project alone has cost the state more than all the others combined in priority 1, or first-year, funding. From 1997 through the 2010 regular legislative session that adjourned on June 21, Poverty Point has cost state taxpayers at least $81,855,000. That compares to $81,257,000 for all the other reservoir projects combined.

Not that the Bayou Dechene Reservoir project in Caldwell Parish isn’t in the running. The cost of that proposed lake to date is $40,650,000 in priority 1 funding—and counting.

Even as the state budget was swimming in a sea of red ink that forced major cutbacks to higher education and health care this year, the legislature plowed ahead, appropriating nearly $8.1 million in funding for Thompson’s reservoir projects in 2010. That amount included $3,152,000 for Poverty Point and $4,940,000 for four other reservoir projects in Allen ($800,000), Caldwell ($1,415,000), Washington ($2,625,000), and LaSalle ($100,000).

Those figures can be misleading because if bonds approved are not sold or funding appropriated for a project are not spent, the project must obtain renewed approval the following year. Bayou Dechene, for example, has received approval of identical amounts of $1,415,000 in each of the last seven years, including 2010.

What is not misleading, however, is how the Thompsons, through the efforts of Francis, have ensconced themselves in profitable recreational lakefront property development largely at the expense of taxpayer dollars. Francis Thompson even convinced the state in 2006 to take control of the 439-acre Black Bear Golf Course which is part of the Poverty Point Reservoir development and to install Mike Thompson as administrative director of the golf course.

But more significantly, was the plan to develop an elaborate retirement community at Poverty Point Reservoir. After purchasing the land and constructing elevated berms on which the state constructed roads and cul de sacs that would extend outward as island lots into the still-to-be-built lake, Thompson, then serving in the House, pushed through HB 1136 in the 2001 session which called for the state to purchase 2,586 acres that would become the Poverty Point Reservoir, excluding of course mineral rights and the berms that would make up the residential island lots on which Francis and Mike Thompson planned to develop a retirement community. That sale was consummated in early 2003 when the state paid the Poverty Point Reservoir District more than $2 million. The state, according to a 2002 state audit, also paid $1.2 million to develop the island lots, one of which was sold to a neighbor of Francis Thompson for $621,200. The state also paid $2.2 million for a keyed-gate entry private road to the lots and another $300,000 for an office burglar alarm system.

Then, during the 2002 legislative session, then-Rep. Francis Thompson struck again with what he probably felt would be the major coup. HB 84 of that session called for the exemption of a “developer of a qualified retirement community” from having to pay state or local ad valorem (property) taxes. The measure passed Senate by a 33-0 vote and the House with only seven dissents. Thompson might have been expected to abstain from voting on a measure that stood to benefit him financially—but he didn’t. Instead, he was among the 93 members voting in favor of the bill that eventually became Act 57 when signed by then-Gov. Mike Foster. Likewise, Thompson was one of 99 House members who in 2001 voted in favor of HB 1136, Thompson’s bill to sell Poverty Point Reservoir to the state for $2 million.

The only fly in the ointment was that the measure would have to go before the voters as a constitutional amendment in the Nov. 5, 2002 statewide election. It turned out to be a major problem when voters rejected the proposed amendment.

Thompson, upon being term-limited in the House, was elected Senator in 2007 to succeed similarly term-limited Charles Jones. Undeterred over the failure of the 2002 proposed constitutional amendment, he tried again, this time with SB 584, a bill identical in language to the 2002 House bill. This time, opponents were better prepared. The Legislative Fiscal Office provided estimates that the bill, if successful, would cost local and state governments as much as $600,000 per year in lost revenue.

Perhaps Francis Thompson, in voting in favor of HB 84 back in 2002, a bill that had the potential of enriching himself by as much as $600,000 per year was not joking when in his farewell address to the Louisiana House in 2007, he admonished fellow House members to “never allow ethics to get in the way of a good bill.”

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With the elevation of Brant Thompson to interim commissioner of the Louisiana Office of Alcohol and Tobacco Control, the question becomes how many of State Sen. Francis C. Thompson’s family members will end up in high-ranking positions in Louisiana state government?

Brant Thompson, one of Francis Thompson’s two sons who are employed by state agencies, served for a number of years as ATC deputy commissioner. He was promoted to interim commissioner after his boss, Commissioner Murphy J. Painter, resigned last week. Thompson’s salary before his promotion was listed at $84,864 per year. Painter, meanwhile, is under investigation by state police and the state inspector general’s office.

Among other things, Painter is being investigated for hacking into personnel files of employees and strangers alike, of sexual harassment, discrimination, and stalking.

Thompson’s other son, Todd Thompson, works for the Louisiana Department of Agriculture. Sen. Francis Thompson (D-Delhi) served for four years as chairman of the House Agriculture Committee before being term limited for his House seat and subsequently was elected to the Senate seat formerly held by similarly term-limited Charles Jones of Monroe. He now serves as chairman of the Senate Agriculture, Forestry, Aquaculture, and Rural Development Committee.

Francis Thompson’s first cousin, J.S. “Bud” Thompson, is director of the Louisiana Office of Risk Management, which is being privatized over a five-year period. Bud Thompson’s wife recently retired from her position with the Louisiana Bond Commission.

An older brother, Clyde “Weasel” Thompson (as he was known when he coached P.E. at Louisiana Tech University in Ruston in the 60s and ’70s) served for a time as second in command to Department of Transportation and Development Secretary Paul Hardy during the administration of former Gov. Dave Treen and more recently has been serving as Executive Director of the Madison Port Commission at a salary of $49,207 even though he reportedly rarely leaves home and even more rarely shows up at his office.

Finally, the senator’s younger brother, Mike Thompson, was formerly mayor of Delhi and later served as director of the Poverty Point Reservoir District.

Controversy seems to follow members of the Thompson family in their capacities as public employees. Besides Brant, who received his promotion at ATC by default, his brother Todd was ticketed six years ago for driving while intoxicated in Baton Rouge after being involved in an auto accident at 10:15 p.m. on July 7, 2004 while driving a Department of Agriculture vehicle.

The Baton Rouge city police accident report said that while the accident was not the fault of Todd Thompson, he was nevertheless cited for DWI after refusing a field sobriety test at the scene of the accident. Todd Thompson, despite his driving while intoxicated in a state vehicle at 10:15 p.m., remained in his job.

Francis Thompson has been the subject of considerable controversy with his proposed ground water reservoir feasibility studies around the state, including Poverty Point in Richland Parish, as well as Washington Parish, Lincoln Parish, and others. Poverty Point received appropriations totaling more than $3.1 million in this year’s appropriations and capital outlay bills.

Bud Thompson was the catalyst in the privatization of the Office of Risk Management which was facilitated by what some employees felt was tweaking the evaluations of companies that bid on the contract so that an area private claims adjusting firm might win the contract. The outsourcing of the agency will either force employees into working for the private firm or taking early retirement. Those who move into the private sector will have their retirement seniority interrupted in some cases decades before employees are eligible for retirement though Bud Thompson, in his own words, will still have his job.

Mike Thompson was indicted and subsequently convicted in federal court for using Poverty Point Reservoir District employees to perform work on his private property.

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            The fiscal news from Baton Rouge continues to be bad. Besides a projected $319 million deficit for the current fiscal year that ends in seven weeks, there have been moves to privatize state services, a sell-off of state assets, layoffs, and now a massive oil spill that threatens the state’s seafood industry.

            There are those who insist it didn’t have to be that way but 60 years ago, on June 5, 1950, everything changed. That’s the day that the U.S. Supreme Court ruled that all of the submerged land from the shores of coastal states belonged not to the states, but to the federal government.

            It was a devastating decision that affected coastal states from Texas to Florida. An earlier decision, in 1947, had a similar affect on California. The ultimate cost to the states estimated as high as $300 billion, according to the late Mike Mansfield, former senator from Montana. Mansfield, writing in the May 4, 1953 Congressional Record, was critical of the decision by the Eisenhower administration to returned title of the submerged land back to the states.

            Eisenhower’s action, which was approved by the House on April and by the Senate on May 5, reversed a proclamation by President Truman in 1945.

Truman, in his Continental Shelf Proclamation, said that federal government had jurisdiction over all the mineral resources in the lands beneath the oceans out to the end of the U.S. Continental Shelf. Immediately after he issued the proclamation, the federal government initiated litigation against the states, claiming sovereignty over all offshore resources. Truman reasserted that position on Jan. 16, 1953, just before leaving office when he issued an executive order that set aside the submerged lands of the Continental Shelf as a naval petroleum reserve.

The issue of tidelands mineral rights didn’t appear of major importance to either Louisiana or the federal governments other than shrimpers and oystermen, until technology progressed sufficiently to drill in offshore waters. In November of 1947, the first such well was completed in 16 feet of water in the Ship Shoal area in the Gulf of Mexico, about 12 miles south of Terrebonne Parish. After that, all bets were off.

            Just as with California, litigation soon followed as the federal government filed suit against both Texas and Louisiana over control of more than four million acres of submerged land. Then, in the early fall of 1948 came one of the biggest negotiating blunders in the history of Louisiana politics that ultimately led to the landmark Supreme Court decision that will in all probability go unnoticed by most on its 60th anniversary on June 5.

            The players included President Truman, Speaker of the U.S. House Sam Rayburn, Gov. Earl K. Long, Lt. Gov. Bill Dodd, and Plaquemines Parish boss Leander Perez. Lurking in the shadows was the man who would emerge central to the decision by Long to refuse a generous offer from Truman that would cost Louisiana upwards of $100 billion, according to Dodd. That man was 29-year-old Russell Long, Earl’s nephew and the son of Huey P. Long.

            Dodd, in his book Peapatch Politics, laid out the details of a deal gone bad as a result of Russell Long’s political ambitions and Perez’s determination to protect his questionable control of mineral-rich Plaquemines Parish with Earl Long and Dodd caught in the tug-of-war between the federal government and Louisiana.

            In 1948, Russell Long was a candidate for the U.S. Senate. Perez, who was also head of the Democratic State Central Committee, ran his own less sophisticated but equally prosperous version of Huey’s old Win or Lose Oil Company in Plaquemines and, according to Dodd, was not above a little blackmail and extortion to protect his fiefdom. Rayburn was Truman’s emissary who was instructed by the president to make what in hindsight was a more than generous offer to Louisiana to settle the federal lawsuit against the state.

            In that fateful autumn of 1948, Rayburn called Dodd and Louisiana Attorney General Bolivar Kemp to a Washington meeting. Also in attendance in Rayburn’s office were Perez, Texas Attorney General Price Daniel, several representatives of the Department of Interior, as well as others.

            Rayburn, without fanfare or ceremony, offered to settle the Tidelands dispute with Louisiana by offering the state two-thirds of all revenues accruing from mineral bonuses, leases, and royalties in the two-thirds of a three-mile band extended from the Louisiana coastline outward into the Gulf of Mexico. Rayburn also offered the state 37.5 percent of all revenues in the Tidelands outside the three-mile band. In addition, Rayburn said the federal government would drop its lawsuit against the state. It was a much better offer than the state had anticipated and everyone present except Perez was ready to jump at the offer.

            Perez told Rayburn that he would recommend to Gov. Long that the offer be rejected, prompting Rayburn to explode. “This ain’t no compromise,” he said. “It’s a gift, and you better take it while the president is in the mood to give it to you.”

            Perez, who as attorney for Plaquemines Parish’s various levee boards, was in a position to dictate how and to whom the levee boards leased their lands. Many of those leases went to corporations he and his family controlled, reaping him millions in much the same manner in which Huey Long had structured his Win or Lose Oil Co. With no intention of losing any of his power, he got to Earl Long first and convinced the governor that the state was being sold a bill of goods by Truman and Rayburn. He insisted, moreover, that the state would prevail in the federal litigation against the state even though California three years earlier had lost an identical lawsuit.

            Perez, who was backing States’ Rights presidential candidate Strom Thurmond for president, controlled the state Democratic ticket and threatened to take Russell off the States’ Rights ticket, which would, in effect, hand the U.S. Senate seat to Shreveport Republican Clem Clarke. Earl wanted his nephew to win the election and eventually capitulated to Perez’s demands to reject Truman’s offer, prompting Baton Rouge Morning Advocate Editor Maggie Dixon, a close friend of the governor, to remark, “Earl is gonna trade our chances to be a tax-free state in order to elect that little tongue-tied nephew of his to the U.S. Senate.”

            Dodd, in his book, speculated that the immediate loss to the state was $66.5 billion, not including billions more paid in bonuses and leases, plus the severance taxes that would have amounted to about a fourth of the total value of production. Dodd said the cost as of 1986, when he wrote his book, was “$100 billion plus,” with future losses as much as $10 billion a year.

            Still, given the track record of the legislature to fritter away past “embarrassments of riches,” one would have to wonder how such an influx of revenue might have taken legislators from embarrassment to humiliation in emptying the state coffers.

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            In the constantly-shifting tides of Louisiana politics, it seems the same personalities keep bobbing to the surface over and over in a never-ending parade of appointments, resignations, and re-appointments, always ushered in or bid adieu with words of laudatory praise and expressed optimism.

            Such is the case of Angelé Davis, who until this week served as Commissioner of Administration for Gov. Bobby Jindal. Before being brought on board by Jindal, she served as Secretary of the Department of Culture, Recreation & Tourism and prior to that, she was Deputy to Commissioner of Administration Mark Drennan in the administration of Jindal’s mentor, former Gov. Mike Foster.

            On her way out the door, it was announced that Davis would enter the employ of politically-connected Arkel International of Baton Rouge as vice president of strategic programs. She will be in charge of “identifying and evaluating strategic acquisitions and business partnerships and alliances, business development strategies and capitalization and overseeing strategic planning,” according to an Arkel press release.

            In 2007, the First Circuit Court of Appeal overturned a ruling favorable to Arkel during litigation initiated by Arkel against the state. The trial court judge who ruled in Arkel’s favor on a key motion was Tim Kelly of the 19th Judicial District. Kelly is married to Davis. One of Arkel’s attorneys was Murphy J. Foster, son of former Gov. Mike Foster. Kelly’s ruling was handed down before Davis joined Jindal’s administration.

            “Angelé led us through some unprecedented budget challenges and our state is in a better posture today because of her cost-cutting approach and dedication to streamlining government,” Jindal said. “Paul Rainwater will be an effective leader at DOA, as he was at LRA and as Deputy Chief of Staff. The budget challenges facing our state are historic and his dynamic thinking and quick action will be essential to moving our state forward,” the governor added.

            As soon as it was announced that Davis was leaving the state, speculation began as to the reason for her sudden departure. Some equated her and other top Jindal administration officials’ recent exodus to “rats deserting a sinking ship” in anticipation of impending budgetary shortfalls next year estimated by some as approaching $2 billion to $3 billion.

            Others felt that agency privatization and the controversy surrounding the awarding of the contract for health coverage to Blue Cross-Blue Shield of Louisiana led to her resignation, or ouster.

            Considerable controversy resulted from the handling of the privatization of the Office of Risk Management when Davis appeared before the Joint Committee on the Budget with no supporting documentation from her or agency Director Bud Thompson. Both were chided by committee members and told to return later with information requested by lawmakers. Lawmakers didn’t learn until after the privatization contract was approved that the state would actually be obligated to an increase in state funding the first year of the contract.

            A month later, when Blue Cross was awarded the contract for health coverage for 114,000 state employees, dependents, and retirees, Humana, which had previously held the contract, appealed to Davis to block the contract. Davis refused and Humana filed suit against the state claiming that the Office of Group Benefits made a “mockery” of the contract process by “awarding a contract that was never bid,” according to Humana attorney Phil Franco.

            Tommy Teague, executive officer of the Office of Group Benefits, said the Blue Cross contract, which took effect on July 1, would save the state $34 million in the first year.

            But on June 21, Judge Mike Caldwell, who serves with Davis’s husband, Judge Kelly, in the 19th Judicial District in Baton Rouge, ordered the state to reconsider its award of the contract to Blue Cross. Caldwell said Humana had raised some valid issues over the Blue Cross contract. Within a matter of days following Caldwell’s order, Davis announced her resignation, which takes effect this Friday.

            But when Davis decided to leave the state for Arkel, she did not leave controversy behind.

            When former Congressman William Jefferson was convicted on 11 of 16 federal counts of racketeering, conspiracy, solicitation, and money laundering, the second count for which he was found guilty was for conspiracy to bribe officials of Arkel Sugar, one of Arkel International’s many interests. That charge involved Arkel’s efforts to build a $500 million sugar mill in Kenya for which Jefferson allegedly demanded a 4-percent cut in exchange as “consulting fees” for his brother, Mose Jefferson.

            Deborah Haggard, who was Arkel Sugar’s vice president when the deal was consummated in 2001, said the extent of Mose Jefferson’s consulting was when he appeared to receive his pay, which totaled just over $21,000. “To the best of my knowledge, he didn’t do anything,” Haggard said. Arkel did secure an $8 million feasibility and engineering contract with a Nigerian sugar company, according to the William Jefferson indictment documents.

            Arkel, an infrastructure and construction services company employing some 300 people and which works with government agencies, had about $85 million in sales in 2008 and boasts of having constructed the world’s largest sugar refinery in Sudan. Besides sugar mills, the company engages in the design, engineering, and construction of biomass power generation, ethanol plants, warehouses, and port facilities as well as offering food service solutions to government agencies and commercial organizations during times of disaster such as Hurricane Katrina, and sustained catering operations for longer duration missions in remote regions.

            In April, Arkel International was awarded a $6.4 million federal contract by the Kandahar Air Field Regional Contracting Center in Afghanistan to set up electrical power and force protection barriers at 16 buildings at Camp Leatherneck in Helmand Province, Afghanistan.

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