The gist: NewGen Strategies & Solutions, LUS’s consulting engineer, fired back at Mayor-President Josh Guillory, saying in a July 2 letter obtained by The Current that his decision to publicly lay out a case for firing the longtime consultant was malicious and politically motivated.
Get caught up, quickly: In mid-June, The Daily Advertiser reported that Guillory planned to fire the Texas-based engineering firm, accusing it of failing to discover improper payments from LUS to LUS Fiber in an alleged “scheme” to prop up Fiber’s finances. In a letter to council members, Guillory accused the firm of being “grossly negligent,” saying he found it hard to believe “the failure to report was not purposeful.” Guillory’s letter was accompanied by a 14-page report prepared by Assistant City-Parish Attorney Larry Marino, in which he tirelessly defends the qualifications of interim LUS Director Lowell Duhon while attacking NewGen’s performance, and another letter by CAO Cydra Wingerter praising Duhon. All three were obtained by The Advertiser for its report.
Guillory’s letter has escalated a dispute with the consultant that began with the previous administration. NewGen initially raised questions about Duhon’s qualifications after he was first named to the position by former Mayor-President Joel Robideaux. Robideaux falsely claimed the leadership shakeup was requested by the Louisiana Public Service Commission, which the PSC denied. Many of the same players in the spat are holdovers from Robideaux’s administration, including Duhon, Wingerter and Marino — who has replaced assistant city-parish attorney Mike Hebert as LUS counsel after decades in that role — and LUS Fiber interim Director Kayla Miles Brooks. Guillory and Robideaux also share political consultant Joe Castille.
Playing politics. In its Thursday letter, NewGen says it’s left to question the mayor’s motivation for circumventing its professional services agreement, which calls for LCG to promptly notify the consultant of its concerns and comply with the covenant of good faith and fair dealing implicit in the agreement: “You drafted your letter to create an appearance of impropriety and lack of integrity on NewGen’s part, and intentionally, negligently or otherwise seek to make it public. The only conceivable purpose we can discern for this approach was and is to impugn NewGen’s integrity … divert attention from the fact that LUS and LUS Fiber were audited annually by LCG’s auditors, audits were approved by LCG’s administrations and staff and audited by the LPSC annually, or to pursue some unknown political motive.”
LUS bond covenants require the consulting engineer to approve the selection of a qualified director. But both Robideaux and Guillory have undermined that process in naming Duhon to the position on an extended interim basis. In October of 2018, assistant city-parish attorney Hebert issued an opinion asserting NewGen’s approval wasn’t required for an interim appointment, if indeed the appointment was temporary. LUS has been without a permanent director for two years. When The Advertiser reached out to NewGen to comment on the allegations in Guillory’s letter to the councils, the company’s managing director, Tony Georgis, told reporter Andrew Capps that he’d been left in the dark. “We simply haven’t been notified by the mayor-president or LCG or anyone in regards to our performance or employment status with LUS and LCG,” Georgis told the paper.
NewGen ultimately counters that LCG should look within when casting blame. The firm wasn’t on board in 2011 when the largest of the problematic transactions related to outage monitoring began. NewGen points out that LCG received annual reports from its own Office of Finance & Management, as well as other audit reports and oral audit presentations each year, including audits performed by its longtime independent auditing firm, Kolder, Slaven & Company, that were later incorporated into LCG’s Comprehensive Annual Financial Report. The most recent CAFR for the year ended Oct. 31, 2019, was submitted to LCG by its CFO, Lorrie Toups. “So far as NewGen knows, none of these reports and audits uncovered or reported on the scheme,” NewGen’s attorney adds. NewGen relied on those reports and audits to evaluate LUS’ financial health as outlined in the consultant’s scope of work.
Duhon himself missed the questionable transactions. As CAO under Robideaux for nearly four years, the letter points out, Duhon supervised all of LCG’s departments with the one exception of the legal department. “Apparently, Mr. Duhon, just like LCG personnel, independent auditors and the Mayor-President himself, did not discover and was not aware of the scheme before 2019,” the letter continues.
Mountain out of a molehill. NewGen argues that while the alleged overpayments found by the Robideaux and Guillory administrations may be a serious matter, their economic impact is immaterial to LUS’s annual revenue. The amount so far deemed improper and since repaid, $1.7 million in charges accrued over several years for sewer communication lines that were never connected, represents less than 1 percent of LUS’s $233 million in annual gross revenue. Neither the City Council (which has replaced the LPUA as LUS’s governing body) nor the Public Service Commission, which has limited oversight over fiber because of the Local Government Fair Competition Act, burdensome legislation pushed by LUS Fiber’s competitors as it was getting off the ground in 2004, has found the issue of overpayments “material enough to initiate legal action or pursue the matter in any other meaningful way,” the letter says. Guillory has, meanwhile, repeatedly asserted the payments are illegal in public statements, in contrast with Robideaux who was more circumspect in alleging criminality, even as he was leaving office and suggesting that more transactions were improper.
Guillory’s end game isn’t clear. The effort to burnish Duhon’s reputation might suggest the mayor-president intends to make Duhon’s job permanent. The Guillory administration has previously maintained that Duhon was kept in place to oversee ongoing inquiries into the alleged overpayments, but the timeline for his interim appointment has been extended several times since he assumed the role last year.
“I don’t think the decision has been made,” LCG spokesman Jamie Angelle told The Current Friday morning, noting he is “not part of those discussions.”
Duhon himself could not immediately be reached for comment Friday about his long-term interest in the job or whether it has been offered.
In early February, Guillory contracted a CPA firm to perform a forensic audit of LUS (due to be completed any day now), on top of kicking over to state police a criminal complaint alleging email archives and computer files were destroyed by LUS employees. Guillory said he turned the complaint over to state police for the sake of removing the air of local bias, but state police declined to open an investigation. Instead, District Attorney Keith Stutes stepped in, asking for documents about prior investigations and audits from LCG. Stutes requested the documents in mid-February, but the bulk of them weren’t turned over for months. Angelle confirms the remaining documents were sent to Stutes in late May.
“I have all the confidence in this man,” Guillory said in a May 8 coronavirus press conference, gesturing to Duhon, “and he’s doing a great job.” When our reporter asked the mayor if Duhon would be in the job permanently, Guillory responded: “We’re still technically in a search for a new director.” Angelle later explained that the mayor simply meant to communicate the difficulty of filling such a position in the midst of the coronavirus pandemic.
NewGen says in the letter that it will complete work on two additional task orders signed with LCG. “NewGen attempted to confirm that, notwithstanding the business character assasination contained in your letter, LCG expects it to complete its Task Orders,” NewGen’s attorney writes. “Not having received a response to that inquiry, and not having received any notice of termination, NewGen fully intends to perform and expects Lafayette to honor its commitment to pay for those services.” Angelle confirms to The Current that LCG will indeed honor the two outstanding contractual obligations.
NewGen doesn’t say what kind of remedy it is seeking. Calling the allegations against it “malicious and unjustified,” NewGen says it reserves its right to pursue legal avenues “to remedy the effects of your disparagement” and breeches of the contractual agreement. Calling it an “interim step,” NewGen asks Guillory to “retract your letter from The Daily Advertiser, and from any other person to whom you published your claims.”
NewGen’s Colorado-based attorney, Charles Jacobs, did not immediately respond to a phone call and email asking whether what NewGen is seeking is a retraction of the disparaging statements or an apology from Guillory. Angelle says Guillory “absolutely” will not apologize. “He 100 percent stands behind those statements,” Angelle says.
The July 2 letter gives LCG’s attorneys eight days to respond, and Angelle confirmed today that a response is forthcoming.
“Pending that response,” NewGen’s attorney writes, “we will not release this letter or its contents to The Daily Advertiser or any other publication.”