Nov. 2, 2006 — During a Committee of the Whole hearing Thursday, it came to light that a controversial letter acknowledging the Public Services Commission's alleged support of a plan to finance a $470 million bankruptcy debt with local phone company assets was actually written by the PSC's legal counsel after consultation with an Innovative Communication Corp. official and a technical consultant for the PSC.
The letter, which was published by the Source in an article dated Oct. 16, is signed by PSC chairwoman Alecia Wells and assures V.I. Telephone Co. (Vitelco) President David Sharp of the full support of the PSC to use the phone company's assets to fund a bankruptcy settlement for upstream companies owned by Jeffery Prosser (See "Attorney Asks PSC to Subpoena Key Players in ICC Bankruptcy Agreement as Signed Letter Comes to Light").
While both Innovative and the PSC have denied reports of a secret agreement, and attempts have been made to deny the existence of the letter, PSC legal counsel Jeffrey Moorhead told senators during Thursday's hearing that he composed the document after discussing issues relative to the bankruptcy settlement with Sharp and Gregg Mann, a technical consultant to the PSC.
All commission members, Moorhead and testifiers representing Innovative were sworn in at the beginning of the meeting at the request of some senators who said they wanted to make sure "everyone was telling the truth."
Moorhead said he, Sharp and Mann "intentionally" had a verbal conversation to discuss the matter so that a document could not be presented before the PSC or subpoenaed by the Legislature.
"So really this letter should have been signed by you," Sen. Norman Jn Baptiste said to Moorhead.
"Maybe it should have been, and maybe that was a mistake that I made," Moorhead responded. "But I am proud to say that when I got up this morning, there was a dial tone on my phone."
While Wells said at the beginning of the meeting that the "first time" she "knew of the letter" was after it was published by the Source, she told senators at the end of the meeting that she signed the letter after Moorhead advised her to do so.
She explained that the letter was one in a set of three which intended to urge the bankruptcy court not to put Vitelco "in jeopardy" by possibly putting the company into "receivership."
Wells said she had not consulted with any other commission members before signing the letter. This statement generated concerns for Sen. Ronald E. Russell, who said that the document as written gives the impression that all PSC members were in support of a proposed settlement.
"I want to understand just how letters of this magnitude can be sent on advice of counsel, possibly committing the PSC to something without having a meeting where everyone is present," he said.
Wells said she "believed" she "had the authority because it [the letter] was OK'd by counsel."
"I don't believe that there was any commitment made in the letter," she added.
In response to a question posed by several senators about why the letter was written, Moorhead said, "We wanted to keep the settlement negotiations going, and to indicate that PSC would be in favor of trying to negotiate a settlement."
He added that the letter has "no legal standing" since the PSC had not formally met to discuss or sign off on a settlement.
Attorney Maria Tankenson Hodge, who appeared Thursday representing a ratepayer, disagreed with Moorhead's statements, and said that the letter did have legal standing since it was referenced in documents filed by ICC attorneys in District Court.
"So somebody must have thought that the letter had legal significance if they submitted it to a federal court," she said.
Hodge, a former legal counsel to the PSC, added that if Vitelco assets are leveraged against the debt, the repayment of and the debt service on the loan will be passed onto ratepayers. "That is how utility rates are set," she said.
On Wednesday, attorney Adam Christian, of the law firm of Hodge and Francois, filed a motion in the Bankruptcy Court of the St. Thomas-St. John District that supports Hodge's statement.
The motion, which asks the court to intervene in the settlement agreement and to oppose ICC's motion to seal documents in the bankruptcy proceedings, states, "It is apparent that taking on a debt of this magnitude is likely to have an as yet unknown impact on the conditions of Vitelco, therefore also impact the rates Vitelco charges to its subscribers ."
When asked by Jn Baptiste whether borrowing against Vitelco would increase rates for consumers, ICC Vice President for Corporate Affairs Holland Redfield II said, "No."
Later in the meeting, however, he modified this statement and said that he "had been told by our people" that telephone service rates would not increase for consumers.
He also added that he "can't say why" ICC's attorney's referenced the letter in the District Court documents. "But attorneys file things all the time, and they also amend things all the time," Redfield said.
When asked how he felt about Hodge's statements, Moorhead said he "disagreed with everything she said."
"She was legal counsel to the PSC for 22 years," he added. "And, quite frankly, I think she wants her job back. But I'm representing the PSC now."
While Moorhead said that Thursday's meeting was an attempt to involve the "PSC in a political football five days before the election," Senate President Lorraine L. Berry laid out the facts.
"Senators had legitimate issues about this letter and asked for a meeting to be called," she said. "And after listening to the testimony, it is clear that there is a letter written by you and signed by Ms. Wells indicating the support of the PSC in this matter. While it doesn't matter what you did because the letter is void until the whole commission makes a decision on the matter, speculation could be raised about why the letter was written in the first place. And my concern is how this proposed settlement would affect the ratepayers."
Berry said the next step for the senators would be to wait and see what happens with the courts (including Wednesday's aforementioned motion) and how ICC proceeds in financing its debt and whether or not the PSC approves a settlement agreement.
Thursday's meeting came at the request of Sen. Louis P. Hill, who twice requested that Berry convene a Committee of the Whole to take testimony from PSC officials regarding the letter and possible violations of the Sunshine Act and local disclosure laws.
After Hill's requests were denied, a petition was circulated and signed by a majority of senators asking that a meeting be called.
On advice of counsel, PSC members declined to testify at a Committee of the Whole hearing called late last month to discuss the matter. The commission's members were subsequently subpoenaed to appear on Thursday.
All senators were present during Thursday's meeting.
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