Mayor Bob Kiss: Report Critical of Burlington Telecom 'Lacks Credibility'

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It's a tried and true trick of the trade: If you have bad news to release, ship it off to the media as near the end of business on Friday as possible.

Both today and last Friday, Queen City officials released statements about the beleaguered Burlington Telecom between 4 and 5 p.m. 

Today's release was critical of a state report that itself was highly critical of the financial and management decisions that led to Burlington Telecom's hefty debt load and poor financial condition.

Last week, Mayor Bob Kiss issued a brief statement saying he would comment more fully at a later date. Today, Kiss issued a broader critique of the report, but said the city will respond further next week as it more fully reads and evaluates the report.

The report, written by Michigan*-based Larkin and Associates, was initiated in late 2009 after it was first revealed that the city had essentially loaned BT $17 million in violation of its certificate of public good.

A key finding from the report is that BT was in debt, and in violation of its CPG, as early as September 2005 — back when Mayor Peter Clavelle was in office and BT's General Manager was Tim Nulty.

The Larkin report also largely confirmed what has been known for months — BT is so far in debt that it can't afford to climb out, and its future as a standalone company is bleak. A special Blue Ribbon Committee came to similar conclusions earlier this year. From that earlier committee's work the city hired the consulting firm Dorman & Fawcett to help the utility attempt to right itself and renegotiate its $33.5 million lease with CitiCapital.

"Larkin praises the Blue Ribbon Committee but fails to observe that the city has been implementing the committee’s primary recommendations," said Kiss in a statement. "With the assistance of Dorman & Fawcett, the city has sought to address the CitiCapital lease while improving BT’s cashflow and the efficiency of BT’s operations."

Dorman & Fawcett took over complete management of Burlington Telecom in August after General Manager Chris Burns left to take a job with a telecom firm in Alaska.

At a Public Service Board hearing, city officials told state regulators that they are in talks with potential private investors and partners to keep BT afloat.

Kiss said he's also calling a special meeting of the city council in January to discuss Burlington Telecom and is weighing the option of filing an official response to the Larkin Report with the PSB.

The city claims the report has "several gaps and omissions," including:

• Larkin staff never contacted or interviewed city officials or the city’s consultant Dorman & Fawcett;
• Larkin never interviewed the city’s independent auditors, Sullivan, Powers & Co;
• Larkin’s analysis fails to include recent developments with CitiCapital; and
• Larkin failed to account for BT’s current financial status and improvements implemented since Dorman & Fawcett took over interim management of BT nearly four months ago.

“The Larkin Report lacks credibility,” said Kiss. “BT’s viability is of paramount importance. It is a major mistake to rely on the Larkin report. It is dated, incomplete, and contains numerous omissions.”

Kiss and other city officials claim almost every issue cited from the city’s management letters, in section L of the report, had been addressed by the city by the end of FY10, at least six months before Larkin completed its report. In addition, a formal process for monitoring the Certificate of Public Good (“CPG”) was addressed in September 2009 prior to initiation of the Larkin report; however Larkin failed to note this significant development, offiicals claimed in a release.

“Our review shows that Larkin failed to understand how and when the city addressed issues identified in auditor management letters, causing the report to be misleading,” said Chief Administrative Officer Jonathan Leopold, who the Larkin Report criticizes for withholding information from the city council and public about BT's debt. Leopold denies he withheld information, claiming that city councilors were informed of BT's money problems in late 2007 after former GM Tim Nulty resigned.

Leopold recently lost a bid to retain immunty from a citizen's lawsuit filed against the city and Leopold for mismanagement.

City officials also claim the Larkin Report doesn't take into account any of the work that is being done by Dorman & Fawcett, nor did the consultant talk to Dorman & Fawcett about its concerns.

City officials also called into question the independence of the report.

"This report has been characterized as independent, which is not true. In reality, it was prepared for the Department of Public Service and David O’Brien in the context of an adversarial proceeding," said Kiss.

Kiss said Larkin was a consultant during a rate increase case last year involving Burlington Electric. Larkin’s analysis in that case was ultimately rejected by the parties in favor of the city’s position, Kiss noted.

* The consultant's home state was incorrect in the initial post. It has been corrected in this version.

Comments

[MURPHY]

How can Bob Kiss accuse anyone or anything of lacking "credibility"? If you look up the definition of the term "lacking credibility" in the dictionary, they give a picture of Bob Kiss as the definition.

[murphy]

BTW, the very same picture also appears as the definitions of "weasel" and "dunce" and "liar."

[Frank Frank]

Wat else is there left to say:

Mayor Bob Kiss: Get out of my City, you Jerk!

[dale tillotson]

How can Kiss criticize the completion of this audit when on page 47 of the 51 page audit it says the auditors were not allowed in the BT office to investigate questions concerning equipment repairs. The auditors were greeted with the following. their request was denied, they were told that the individual responsible did not have time to escort them or answer their questions.
BT knew the audit was occuring any sensible responsible operation being audited knows it is best to cooperate with auditors.
BT and their lack of cooperation along with the Mayor's denial of reality have gone over the edge.
Bottom line BT may be salvageable at a price, the Mayor and CAO must not be involved any further.
They have to go to restore any credibility to the city, they must resign. City council I urge you to press with all your limited powers to make it impossible for Kiss and Leopold to insert their key into the doors at city hall. Change the damn locks.

[Buster]

Hey Totten can you find out if the City has a way to borrow money do they have a line of credit that can be tapped as a short term bridge loan say in the amount of 6 million for the Electric Department or under the guise of a paving project or Parks etc.. a bridge loan to a future Bond.

If the city is able to borrow short with out taxpayer approval is that going on now? who on the City council would be privy to that information the Finance committee?

The 17 million dollar deficit that has placed an enormous hole in the city's budget and it must be impacting cash flow How are they paying the bills. Presumably 17 million that was coming from the Electric Dept Bond and the Airport fund and parking meters. Well the airport was paid back right ditto the electric co. and the parking meters dont generate that kind of cash.

So where did all of this missing money go and how do they get it back? Borrow more that the taxpayer will have to pay back an additional 17million so we lost 17 borrow another 17 and owe 33.5. this is looking like real money now Bob Kiss has no reasonable explanation.

[Jimmy]

I really don't think Kiss wants the report brought up to date - as in, right up to today. The net outflow of subscribers is probably staggering.

This guy will go down in history as one of the worst mayors ever (if anyone's bothering to keep such a history).

[Oy]

I'm glad kiss is fighting back a little. Everyone thinks o'briens is somehow independent. He's not. It would be nice if a repoter would think about that for 2 seconds.

[steve-o]

O'Brien didn't steal from the cash pool. O'Brien didn't hide the stealing from the City Council. O'Brien didn't spend three years telling people that everything about BT was great when they knew it was underwater and might never recover.

[Buster]

The Stench coming out of the Mayors office is overwhelming.
Oy what is O'Brien's motivation to destroy Kiss and BT. He has none zero zip nada he voted yes to this mess to begin with it would behoove him to get a telecom win.

But Leopold was caught out playing fast and loose with the City Treasury. The man ran the place as an enormous ponzi scam. He was using the citys cashpool like the federal reserve. I don't think you know how the FED works so quickly, this is the part that matters. Fractional reserve banking means you grow your money by lending the interest rate is the growth. The FED prints money and loans it out in the repo market short term. then they receive interest and lend out the growth at 10-1.

Leopold in order to Gin up his books was doing this with made up money adding a loan debiting BT in July for 5million charging an interest rate of 1.5% then crediting the phony loan back to BT in March before the audit season the end of year 4th quarter squaring of the books. Thus he kept all of the funny money out of the prying eyes of the auditors they could turn a blind eye to the numbers tax increase cover the difference business as usual.

BT management Amber Thibault and Chris Burns were in on the game. Burns and his mattress mol, helped Leopold cover it up. But some where along the line that money like the Velveteen rabbit became real.

That's where we are today with a crook in the Treasure's seat and a mayor with no credibility covering up and petitioning the court to hide and redact information.

Oy if you were correct and your beloved so called Progressive idiot mayor was so damned honest why hasn't he aired all of this in the open? because he cant thats why.
O'Breins only fault is he has not done enough or been strident enough in exposing the level of corruption that has gone on at Ctiy hall.

[dale tillotson]

Reading further Kiss is concerned that the last 4 months that the audit did not take into consideration improvements over the last 4 months.
I would say that the 48 months proceeding August of this year are the concern. That is where the original $17 million followed by the approaching or exceeding $50 million that we need to recoup is from.
Even with the Mayors optimistic current numbers the capable subscriber rate even at 1005 for the city is not going to get us their.
BT may be salvageable by the taxpayers if they wish, but it cannot be saved with Kiss and Leopold having any involvement other than taxpayers themselves.
Lock the doors, change the keys and get them out of city hall. It is BT's only chance.

[dale tillotson]

sorry should have read 100% not 1005

[dale tillotson]

Have I mentioned the home depot award to the city has not done a lot to soothe my BT Kiss pain in the butt. If not then consider it mentioned.

[dale tillotson]

the filibuster starts.
Kiss must resign

[dale tillotson]

Kiss must resign

[dale tillotson]

Filibuster will now end, Kiss must resign.

[dale tillotson]

Nobody asked for the floor filibuster restarts, Kiss must resign.

[Tim]

"A key finding from the report is that BT was in debt, and in violation of its CPG, as early as September 2005 "

In light of that one has to wonder why the Progressive Coalition was so Hell bent on creating this white elephant. They apparently knew from day one that it wasn't going to turn a profit. What was the appeal?

Was BT designed with the idea of it turning into a patronage machine? A department staffed with connected peeps circulating from City Hall into high paying jobs? Clearly they had some grand schemes to justify the risks they took. As I recall there were some published speculations from years ago that BT would expand into adjacent towns and eventually be statewide, even a regional service. Unfortunately, like compulsive gamblers they just kept right on betting the people's money hoping the cards would change. Instead they got bust after bust.

Now it's: "Just 8 Million more dollars and I KNOW this will work! Hit me!"

It's time to close Burlington TeleCasino.

[LMBTV]

Burlington Telecom charged my account double for December.