Lenoir City appointees run afoul of auditors Question appointments, pay to four for 'personal services contracts'

By TOM HUMPHREY, knoxnews.com
March 15, 2007

NASHVILLE - State auditors say Lenoir City officials used a law passed by the state Legislature in 2000 to give "personal services contracts" to four men - including the legislator who sponsored the bill and pushed for its passage.

Three of the contracts would have run for 40 years and could have been worth as much as $450,000, auditors said.

Former state Rep. Douglas Gunnels, R-Greenback, was appointed to a utility "advisory committee" in May 2001, even though he was ineligible for appointment to the position, the audit said, and was paid $26,267.

Gunnels said in an interview Wednesday he was eligible for the position, despite the auditors' assertion, and held the post on a temporary basis for less than two years - about 18 months to the best of his memory - with pay of less than $1,000 per month for most of that period.

"I'm just kind of baffled by the whole mess, to be honest with you," said Gunnels. "I didn't do anything wrong unless it's wrong to try and help your hometown because they had lots of problems."

The three other men named to the advisory committee, which provided consulting to the Lenoir City Utility Board, were all given 40-year contracts that gave them the same salary and benefits provided to LCUB commissioners, the audit said. Lenoir City Council members also serve as LCUB commissioners.

Clarence Wilson, Billy Cusick and James Johnson were former commissioners of Dixie Lee Utility District, which was taken over by the Lenoir City district in 2000. As Dixie Lee commissioners, the three had voted to approve the Lenoir City takeover, the audit said, creating "at a minimum" the appearance of a conflict of interest.

"It appears the 40-year term was intended to effectively grant a lifetime position to each former Dixie Lee commissioner," the audit said. "It could be argued that the 40-year term is contrary to the public policy of the state of Tennessee."

Also, the audit said, the 40-year term "does not appear to benefit LCUB or its ratepayers."

"Between January 2001, and November 2005, LCUB paid over $235,000 to the advisory committee members," the audit said, calculating that one of the former Dixie Lee commissioners would be paid at least $450,000 over the 40-year term.

The audit, conducted by the state Comptroller's Office at the request of former District Attorney General Scott McCluen, says the situation began developing when LCUB hired a lobbyist to draft legislation related to a proposed merger of Dixie Lee into LCUB.

Registry of Election Finance records show Amanda Haynes Young was registered as a lobbyist for LCUB in 2000.

Gunnels and former Sen. Jeff Miller, R-Cleveland, introduced the resulting bill in the 2000 legislative session and won final approval on April 6, legislative records show. A law already in effect authorized utility districts, after taking over another district, to retain commissioners of the district taken over as advisors.

The old law, however, would have fixed the advisors' terms at four years and resulted in seven former commissioners being appointed. The 2000 bill allowed Lenoir City Council to decide how many persons would be appointed and to set terms as long as members wished.

Gunnels did not seek re-election to the Legislature in 2000 and was succeeded by former Rep. Russell Johnson, R-Loudon, who in 2006 left the Legislature and was elected district attorney general for the area.

Johnson said Wednesday that "brief research" of the situation raised a question about a state law forbidding "official misconduct" being violated. But charges of official misconduct must be brought within two years of the alleged crime being committed, he said.

Since the events occurred in 2000, Johnson said, it appears that no one could be prosecuted. If further research indicates any question about that, Johnson said he would likely recuse himself and ask that a special prosecutor be assigned the case because "Doug (Gunnels) and I are pretty good friends."

The audit says Gunnels was ineligible to serve on the advisory committee because the state law in question would have permitted only former Dixie Lee commissioners or customers to serve. Gunnels was neither, the audit says.

Gunnels, however, said he was a customer because he owned his mother's former home - located within the Dixie Lee service area - and paid the utility bills.

Lenoir City Mayor Matt Brookshire said the City Council would meet soon in executive session to discuss the LCUB situation, including the audit and pending lawsuit.