Funny, I thought you said Malloy’s Energy and Environmental Protection Commissioner was on an NU – Wall Street Conference Call

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As Connecticut residents are now learning, one of the primary speakers on a recent Northeast Utilities/UBS  Wall Street conference call with more than 150 analysts, stock brokers and investors was Connecticut’s Commissioner of Energy and Environmental Protection.

The issue was the development of a new set of electric transmission lines that would allow Canadian company, Hydro-Quebec, to deliver its electricity to southern New England, providing Hydro-Quebec and Northeast Utilities with hundreds of  millions of dollars in new revenue and hopefully lowering electric rates for Connecticut consumers.

According the CTNewsjunkie, “Malloy said he read the transcript of Department of Energy and Environmental Protection Commissioner Daniel C. Esty’s call with UBS investors and saw nothing wrong with what he said…’I read the entirety of the transcript,’ Malloy said. ‘Everything he said there he’s said elsewhere. Almost everything he said I’ve said publicly time and time and time again.’”

Malloy, Esty and others have been strong supporters of Northeast Utilities and the project, but Commissioner Esty’s direct involvement in a UBS investor call generated a swift response from groups ranging from the Connecticut Citizen Action Group to the Connecticut Republican Party.

Calling for a full investigation, the chairman of the Republican Party wrote, “The first question is why did the Commissioner even participate in this call in the first place? There appears to be no State or public interest served by participating in the conference call…It appears that Commissioner Esty, who received $205,000 in consulting fees from Northeast Utilities prior to being appointed as DEEP Commissioner, was trying to curry favor with an entity that formerly employed him.”

Prior to the Republican’s call for an investigation, the CTMirror reported that “Gov. Dannel P. Malloy said earlier today that it is important for him and his commissioners to be explaining public policy to the widest possible audience.”

In this case, UBS had already up-graded NU’s stock from “neutral” to a “buy.”

You can read the latest on the expanding story here: http://www.ctnewsjunkie.com/ctnj.php/archives/entry/malloy_defends_esty_canadian_hydro/ and http://www.ctmirror.org/blogs/ct-gop-chair-asks-ag-investigate-esty-investor-call and http://www.ctmirror.org/blogs/malloy-defends-esty-message-not-delivery-stock-analysts.

And the winner of the “Wow, that’s embarrassing award” goes to Dan Esty, Connecticut’s Energy and Environment Commissioner…

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In an extraordinarily brief but accurate eulogy, the Courant’s Jon Lender summed up the situation in today’s Hartford Courant by saying “The Haddam land swap is dead.”

While the details surrounding the land swap deal are interesting, it’s the politics that has been so riveting.

When I teach my imaginary class on Connecticut Politics and Government, the “Haddam Land Swap” is the case study about how issues are not always what they seem and how Energy and Environment Commissioner Dan Esty learned that converting to a different religion would have allowed him more freedom of thought than joining the “Malloy Team.”

The abbreviated version begins with a multi-year effort to pass special legislation giving a private developer a 17-acre parcel of state land overlooking the Connecticut River in return for a parcel of land adjacent to a nearby state park.  The state land had been purchased as part of an open space initiative developed by Governor William O’Neill in 1986.  Both the grant program and the deed transferring the land in 2003 made it clear the goal was to preserve the land as open space.

On the other hand, the developer really wanted the land so they could build a retail and housing project on the ridge overlooking the river.

Two years ago, with more than a dozen environmental organizations opposed to the land swap deal; Governor Rell used her veto power to stop the effort.

At the time, Dan Esty was a member of the Connecticut Fund for the Environment’s Board of Directors.  CFE was a leading opponent of the project.

Fast forward one year and Dan Malloy had become Connecticut’s Governor and Dan Esty, the state’s Commissioner of Energy and Environment.

A powerful state senator, who served as one of the co-chairs of the Finance Committee re-introduced her legislation authorizing the Haddam land swap deal.  Not wanting to upset the Senator, whose help Malloy needed to pass his $1.5 billion tax package, the Governor and Commissioner Esty spent most of the 2011 legislative session ducking any and all opportunities to voice an opinion on the controversial land swap deal.

In order to get some political cover, as Governor Malloy prepared to sign the special act into law, he wrote to Commissioner Esty asking for his opinion.

Esty wrote back saying “on balance I believe that the State’s conservation and recreation agenda is not harmed by this exchange.”  (This, of course, was a switch from the Department of Environmental Protection’s previous position on the issue before Esty arrived.  In fact, agency officials had prepared a draft of legislative testimony that would once again point out that the land swap was “inconsistent with our policy on the exchange of preserved open space.”) More

Governor Malloy, Please come to Gate 12, Swiss International Airlines Flight 23 to Davos, Switzerland is now boarding

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Davos, Switzerland

Governor Dannel P. Malloy has called the media together to announce that he will be off to Davos, Switzerland on January 25th for four or five days to speak at the 2012 World Economic Forum and that the University of Connecticut Foundation was kind enough to offer to pick up the tab of about $4,500.

Don’t get me wrong, I think it is pretty damn cool that Dan Malloy got himself one of those “impossible to get invitations” to join the world elite at one of the world’s most exclusive events which happens to take place at one of the world’s most exclusive ski resorts.

Malloy will be joining the likes of Bill Gates, George Soros, Bono and other really famous people.

This year’s Davos topic is “The Great Transformation: Shaping New Models, whereby leaders return to their core purpose of defining what the future should look like, aligning stakeholders around that vision and inspiring their institutions to realize that vision.”

Even the title is impressive!

There will be at least 40 heads of state, 18 central bank executives and Germany’s Prime Minster Merkel is giving the keynote speech.

Not to mention the conference co-chairs  – including Yasuchika Hasegawa, President and Chief Executive Officer, Takeda Pharmaceutical, Vikram Pandit, Chief Executive Officer, Citi Corp., Paul Polman, Chief Executive Officer, Unilever, Alejandro Ramírez, Chief Executive Officer, Cinepolis, Sheryl Sandberg, Chief Operating Officer, Facebook and Peter Voser, Chief Executive Officer, Royal Dutch Shell.

And the best of all, the Governor won’t have to travel alone.

The Commissioner of the Department of Economic Development, Catherine Smith, is also going as is Dan Esty, the Commissioner of the Department of Energy and Environmental Protection.

Commissioner Esty is a regular at this ultra-elite conference so his travel and lodging will be paid for by the World Economic Forum but that’s okay because the World Economic Forum doesn’t do business with the state.

Commissioner Smith will use funds from her department’s budget, money that is budgeted for marketing Connecticut and Malloy is tapping into funds at the University of Connecticut Foundation.

And as Malloy told reporters, “I don’t have to pay the $50,000 fee, which other participants are paying, and that’s as a result of the invitation”.

I just wish we could get a transcript of the call from Malloy’s Office to UConn asking them to cover the Governor’s travel expenses.

One would assume the call must have come from the Governor’s Chief of Staff directly to UConn’s new President, Susan Herbst.

Maybe it went something like this:

“Good Morning Madam President.  This is Bob here from the Governor’s Office.  How are you?

Good, good…. oh, yeah, I know, I read the story in the Courant.

The damn media is such a pain in the ass.  I mean it was only $10,000 for new carpets and furniture in the President’s Mansion but they acted like it you were stealing the food out of the mouths of babies.  What did they expect that you’d live with the old carpeting?

I know….we’ll you’ve got our sympathy.

Oh, hey, I almost forgot why I was calling in the first place.

We saw that you took the money for the renovations to your official residence out of the student residential life account and, well, to tell you the truth, we need $4,500 for the Governor to go to a big economic conference in Switzerland at the end of the month.

Pulling money from UConn’s residential life account seems like a bit of a reach, but we were wondering if you could call over to the UConn Foundation and see if the Governor could get a few bucks to cover the trip.

Yes, yes, I know that we made the deepest cuts in history to the University of Connecticut’s budget and we are withholding another $20 million to balance this year’s budget but we did let you raise tuition 25% over the next few years and you can’t say we didn’t come through on getting those Jackson Lab mouse people here to Connecticut.

Anyway, I know you’ve got a lot of other issues coming down the pike, so I’m just checking to see if we can count on you to pick up the tab for the Governor’s trip to Switzerland?

Great, great… thanks.  I know that will mean a lot to the Governor.

How much?  We’re not exactly sure but as I said, let’s say $4,500 and we’ll take it from there.”

Now, if you ask me…. I personally, can’t wait for the UConn people to call for their annual appeal.

I just want to make sure a portion of my donation is going to pay for the Governor’s trip.

I mean, let’s face it, not only do I want to be able to say I helped send the Governor to Davos but I think it’s a really good investment for the University.  If UConn picks up the tab for this trip, hopefully the Governor won’t be so quick to make huge cuts to us next year.

Oh and Governor, I know you are going to be really busy there with three different presentations at the Conference but don’t forget, Bill Gates is hosting the Microsoft Party at the Seehof Hotel from 10pm till midnight on January 26th. 

The place looks spectacular. The nice rooms are $444 a night so it’s gotta be good.  Here is a link to the place if you’ve got time to check it out http://www.seehofdavos.ch/

Let’s Return to the Real Issue: Transparency and Conflicts of Interest

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A mini-firestorm has developed surrounding the issue of whether Connecticut’s Commissioner of Education, Stefan Pryor, should recuse himself from any Department of Education decisions about Achievement First, the charter school management company, that he helped form and where he has served as a member of its board of directors from its inception in 2003 to 2011 when he resigned immediately prior to being named Education Commissioner.

This is not a question about whether Commissioner Pryor has a legal “conflict of interest”.  It is a question of whether the “appearance of a conflict of interest” is sufficient enough that he should recuse himself because that is the ethical and transparent thing to do.

In response to the concerns I’ve raised over the past few days, some reporters have asked Governor Malloy about his perspective on the issue.  To CTNewsjunkie he calls the conflict of interest accusations “ridiculous” and in a CTMirror article he described the issue as “fantastically, ridiculous.”

In an attempt to resolve the differences of opinion let’s just take a moment to review the facts.

Fact #1:  Connecticut law has a very narrow definition of what is legally a “conflict of interest”.  Basically if a public official or their family would financially benefit then it is a conflict of interest.  Both Commissioner Esty and Commissioner Pryor sought guidance from the State Office and were told that they did not have a conflict of interest.

Fact #2:   Connecticut does not have a legal definition of what would be considered the “appearance of a conflict of interest.”   In states that do have a legal definition it is usually defined as whether a “reasonable person” would think that an official has what appears to be a conflict of interest and therefore has a responsibility to take action to eliminate that appearance.

Fact #3:     As a candidate for governor and as governor, Dannel Malloy has said that ensuring transparency in government is one of his most important agenda items.  On his first day in office, the new governor issued a press release that began with IN FIRST ACT AS GOVERNOR, MALLOY SIGNS THREE EXECUTIVE ORDERS…Orders will help institute fiscal responsibility/honest budgeting, transparency…”

 Fact #4:  Although Commissioner Esty, the head of Connecticut’s Department of Energy and Environmental Protection, had an ethics ruling saying that he did not have any “legal” conflict of interest; he announced that he felt, as commissioner, he had an obligation to meet a higher standard, that being to avoid the appearance of a conflict.

Esty announced that due to his commitment to do the job right it was “prudent to insure I was in no way seen as making decisions on a company that I’ve had some close relationships with.”  With that he released a list of 26 companies and two environmental organizations which he had a close relationship.

One of the environmental groups was the Connecticut Fund for the Environment. Esty had served on the organization’s Board of Education and despite having resigned from their board he included them on the list of entities that he would recuse himself from.

Esty earned high praise from a variety of different organizations and individuals for his decision to eliminate even the appearance of a conflict of interest.

A Hartford Courant editorial called Esty’s action “the principled thing to so” and added “Avoiding conflicts of interests are a must for any commissioner but especially so in the highly volatile and often politicized realm of environmental protection.

The Courant concluded “Good for him for putting all his cards on the table and acting ethically”

When Esty later came under fire for leaving a company off his list, Malloy was his strongest defending saying that if there was any issue at all it was that Esty “should have done it [revealed his connection] out of the box”.

Governor Malloy simply could not have been clearer.  One of his most important commissioners had stepped up and set a new standard for transparency and ethics and that eliminating even the appearance of a conflict of interest required him to recuse himself on any issue related to an environmental group whose board he has served on.

Fact #5:  Connecticut’s new Commissioner of Education, Stefan Pryor, sought advice about whether he had any conflicts of interest under state law.  Ethics correctly told him he did not.

But that was never the issue.  The question is whether Commissioner Pryor has an appearance of a conflict of interest when it comes to his relationship with Achievement First, one of the nation’s largest charter management companies with nine schools here in Connecticut.

Commissioner Pryor was a driving force behind the creation of Achievement First.  Pryor, along with his colleague Dacia Toll, led the team that turned the dream of the Amistad Academy into a reality.

Achievement First grew out of that experience as the vehicle for creating more charter schools.  Pryor joined the Board of Directors of this new company.  His partner on the Amistad School project is now the President and CEO of Achievement First.

As one of Achievement First’s Directors, Stefan Pryor has been a vital part of the organization’s unprecedented growth.  Starting with the Amistad Academy, Achievement First now has 20 schools in Connecticut and New York serving almost 5,400 students. As a result of a “Management Fee” collected from each school, Achievement First collects about $4 million a year.

In 2010, Achievement First’s Board of Directors adopted an aggressive strategic plan to grow Achievement First.  The plan, which is outlined in their 2010 Annual Report, is designed to increase the number of Achievement First charter schools from 20 schools to 35 schools in the next few years.  Instead of serving 5,400 students, Achievement First plans to serve more than 12,000 students. If they utilized the present “Management Fee” system they would be collecting nearly $10 million a year.

Perhaps most importantly, Achievement First notes that when their strategic plan is implemented Achievement First “will serve more students than 95 percent of school districts in the United States”.

As Connecticut’s new Commissioner of Education and the Governor’s point person on education reform, Stefan Pryor now finds himself in the unique position of being able to determine whether Achievement First’s aggressive growth plan will succeed or fail.

Fact #6:  This is not about whether Commissioner Pryor, a well-regarded leader and change agent, should be involved in the great education reform debate of 2012.  This is not about whether Commissioner Pryor should be involved in discussions and decisions about whether Connecticut should allow the creation of more charter schools.  This debate is exclusively about whether there is the appearance of a conflict of interest when it comes to Pryor making decisions about applications from Achievement First.

The answer to that question is of course there is an appearance of a conflict of interest.  In fact, I’d assume that any reasonable person would say not only is there the appearance of a conflict of interest but there is a real conflict of interest.

This year’s education reform debate will most likely see an expansion of charter schools in Connecticut.  Even with that expansion there will be more proposed charter school seats than there are funds to pay for them.  Some charter schools will win approval and others will not.  If Commissioner Pryor plays a major role in who wins and who loses, a cloud will forever hover over those decisions.

Fact #7:  Governor Malloy said he would be the governor who brought transparency to Connecticut.

Governor Malloy applauded one of his star commissioners, Dan Esty, when Esty set a new standard of openness and honesty.  Esty even announced that he would not act on any issue related to an environmental organization whose board he has served on.

And now, when Commissioner Pryor is facing the very same decision that Commissioner Esty faced, Governor Malloy calls the suggestion that Pryor remove the appearance of a conflict of interest by abstaining from getting personally involved in decisions that would impact Achievement First “ridiculous.”

In the real world there is nothing “ridiculous” about asking Commissioner Pryor to recuse himself on this one specific area.  Commissioner Esty did so and was hailed as a champion.  It appears, at this point, that Commissioner Pryor refuses to follow Esty’s lead in any way whatsoever.

If there is something ridiculous going here it is a governor who has claimed his commitment to transparency would applaud one commissioner who strived to be transparent, only to defend another one of his commissioners who is striving not to be transparent.

Stefan Pryor Must Address the Conflict or Appearance of the Conflict of Interest he has with Achievement First, Inc.

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Connecticut’s Commissioner of Education, Stefan Pryor, has a big problem.

Pryor co-founded the Amistad Academy, the New Haven charter school and served as the Chairman of its Board of Directors for five years.  In turn, the Amistad effort spawned the creation of Achievement First, Inc., the charter school management company that now runs 20 charter schools in Connecticut and New York.

Pryor, while directing Amistad’s Board, was not only a part of the creation and management of Achievement First, but served on its Board of Trustees from 2003 to 2010.

Pryor’s primary partner in the creation of Amistad now serves as the President and CEO of Achievement First.

Late last year, Pryor quietly resigned his Director’s position with Achievement First.

Most importantly, Pryor knows he has a problem.

A weekend article by Brian Lockhart (click for article) reveals that this past October Pryor called Connecticut’s Office of State Ethics to informally discuss whether, as Commissioner, it would be a conflict of interest for him to take action that would directly benefit Amistad Academy, Achievement First or the ten charter schools that Achievement First runs in Connecticut.

Ethics’ staff informed Pryor that, under Connecticut’s narrow conflict law, he had no direct conflict of interest since he had ended his relationship with Achievement First.

The State Department of Education staff quickly followed up in order to get the opinion down on paper and, more recently sought a formal opinion which the Ethics Commission is expected to approve later this month.

While Connecticut law has a very narrow definition of what is considered a direct conflict of interest, it fails to provide any meaningful definition of what creates the appearance of a conflict of interest.

Last summer, Daniel C. Esty, Malloy’s pick to head the Connecticut’s Department of Energy and Environmental Protection faced these very same issues.

Technically, Esty did not have a “legal” direct conflict of interest because he had ended his relationship with the companies that he had consulted for or the organizations in which he had played a significant role.

But Esty recognized that the public is demanding more transparency and honesty in government and that the appearance of a conflict of interest would undermine his credibility as the leader of his agency.

Esty confronted that concern directly and head on by announcing that he would not get involved in any cases that directly related to 26 companies and 2 environmental organizations that he had worked with over the past five years. As he said, the list includes “companies that were clients of my consulting firm – Esty Environmental Partners – who had the potential to do business or are doing business in Connecticut, and organizations for which I served in recent years on the Board of Directors or other advisory role.”

The Hartford Courant was among those who applauded Commissioner Esty’s decision.

In their July 18, 2011 editorial, the Courant wrote that Esty’s decision to recuse himself from “any matter in which he perceives there’s an actual or potential conflict,” was exactly the type of leaders Connecticut needed.

The Courant went on to say Esty’s action was “the principled thing to do.  Avoiding conflicts of interest are a must for any commissioner, but especially so in the highly volatile and often politicized realm of environmental protection.”

What was particularly important was that among the environmental groups that Esty recused himself from was the Connecticut Fund for the Environment.  Esty had served as a member of the board of directors.

Julie Belaga, a former regional director of the Environmental Protection Agency as well as a former Connecticut State Representative and candidate for governor has been a champion on behalf of the environment and a long-time member of the Connecticut Fund for the Environment’s Board of Directors with Esty.  She told WNPR radio thatEsty was doing the right thing because he was avoiding even the thought of a conflict of interest.

The fact is Commissioner Stefan Pryor’s relationship as a Director with Achievement First was far more significant than Esty’s relationship with the Connecticut Fund for the Environment.

For example, just last year, Achievement First released their 2010 Annual Report that included the news that Achievement First’s new strategic plan called for expanding for its present 20 schools that serve 5,400 student to 35 schools serving over 12,000 in the next few years.  The report goes on to say that with this growth, Achievement First would be larger than 95 percent of the school districts in the country.

As an Achievement First Board member, Stefan Pryor helped create and adopt that strategic plan, a plan that when fully implemented would increase Achievement First’s revenue from $4 million a year in “management fees” to upwards of $10 million a year.

To achieve its goal, it will be critical for Achievement First to expand in Connecticut.

Now Pryor, a founder and long time member of Achievement First’s Board of Trustees finds himself in the unique position of being able to determine whether that aggressive growth plan will succeed or fail.

Not only is that the appearance of a conflict of interest, but any reasonable person would recognize it as a direct conflict of interest.

At the very least, Commissioner Stefan Pryor must do what Commissioner Dan Esty did and recuse himself from getting involved in any decisions that would benefit Achievement First Inc.