Oklahomans Against Bribery

Oklahomans Against Bribery

 

A Brief History of the $16+ Billion AT&T Bribery Refund Case

The Oklahoma Corporation Commission (OCC) regulates both the energy industry and the public utilities in Oklahoma, making it the state’s most economically powerful state agency. Three commissioners serve staggered six-year terms, and at least two votes are required to take any action. 

The Corporate Tax Cut

When the Tax Reform Act of 1986 was passed by Congress and President Reagan, lowering tax rates for corporations and changing the ways corporate taxes were calculated, the OCC did not have time to investigate exactly how these tax changes would affect all the utilities it regulates before the changes went into effect in July 1987. (Obviously, if a regulated monopoly is suddenly paying significantly lower taxes, its costs are now lower and that benefit should accrue to the ratepayers in the form of lower rates – and even refunds, if the lower rates are delayed going into effect.)

Consequently, in late June 1987, the OCC issued orders placing several utilities’ rates subject to refund between July 1987 and whenever the commission was able to determine the impact of the lower tax rates on those utilities.  One of those utilities was Southwestern Bell Telephone Company.  In fact, Southwestern Bell even signed a stipulation, approved by the OCC, agreeing to refund any excess revenues.

The cause under which the commission staff investigated the impact of the Tax Reform Act of 1986 on regulated utilities was PUD 860000260 or “PUD 260” for short.

The Bribery

When, in 1989, the OCC finally issued an order for Southwestern Bell in PUD 260, it did three things.  First, it (minimally) lowered the rates Southwestern Bell was allowed to charge going forward, since the company's tax burden was now less.  Second, it estimated how much in excess revenues the company had earned as a result of the tax changes since July 1987 when the new tax rates went into effect.  And third, it permitted the company to keep the excess revenues it had generated since July 1987 instead of refunding them to the ratepayers (as all the other utilities found to have earned excess revenues during that period had been required to do).  The vote approving the PUD 260 order was 2-1.  It was later revealed that Commissioner Robert Hopkins (one of the “2”) had taken a $10,000 bribe for his vote from a Southwestern Bell attorney.   Trials and appeals in the early 1990s resulted in the federal bribery convictions of Commissioner Hopkins and Southwestern Bell Telephone attorney Bill Anderson, both of whom went to federal prison.

BUT, the vote Commissioner Hopkins was bribed to cast on behalf of Southwestern Bell (now AT&T) was never overturned, and the bribed PUD 260 order has stood ever since.

For decades, Corporation Commissioner Bob Anthony, who had worked with the F.B.I. to uncover the corruption at the OCC, tried to do something about the bribed order, but he could never get a second commissioner to join him.  He also wrote letters and suggestions to the Oklahoma Supreme Court asking them to declare the bribed order void, but the court refused to hear his "suggestions" because they were made by just one commissioner, not the Commission itself by a majority of two.

The Fight for Justice at the Oklahoma Corporation Commission

In September 2015, a group of prominent Oklahoma citizens – including the former head of the F.B.I. in Oklahoma at the time of the bribery investigation Bob Ricks, the former commanding general of Tinker Air Force Base Richard Burpee, Vice-Mayor of Nichols Hills Sody Clements, businessmen Ray Potts and Rodd Moesel, and the former director of the OCC’s Public Utility Division James Proctor – filed an application at the Corporation Commission seeking at long last to overturn the bribed vote in PUD 260 and return what an expert witness says is now $16+ BILLION to the ratepayers of Oklahoma. The bribery refund application is known as cause no. PUD 201500344, or “PUD 344” for short.

In response, AT&T immediately filed a motion to dismiss.  At a hearing in front of the three OCC commissioners on November 3, 2015, an attorney for AT&T literally argued “Bribed votes DO count”!

On September 1, 2016, attorneys for the United States Department of Defense and all other Federal Executive Agencies filed a motion to join the case, citing fraud against tens of thousands of federal government phone lines in Oklahoma that could be eligible for refunds. In a motion to the OCC, the DOD and FEA stated: “The Applicants have presented compelling evidence of intrinsic fraud utilized by Southwestern Bell Telephone Company to obtain certain orders and judgments of the Oklahoma Corporation Commission, to include Order No. 341630. DOD/FEA was affirmatively injured through the aforementioned criminal activity. To date, such injury has yet to be remedied. In the event of a refund of excess revenues by Southwestern Bell and/or its successor(s), DOD/FEA should receive its proportionate share of the recovery.”

The motion by the Department of Defense seeking to join the case was ultimately denied, and the AT&T bribery refund application itself was dismissed by the OCC on September 7, 2016 by a 2-1 vote.

The Fight for Justice at the Oklahoma Supreme Court

The OCC's dismissal of PUD 344 was immediately appealed to the Oklahoma Supreme Court (OSC). In their brief-in-chief, the bribery refund applicants detailed why the state’s highest court should declare the bribed PUD 260 order unconstitutional and require the Commission to re-determine the case. It pulled no punches in describing how the bribery and misconduct by phone company attorneys and executives was not limited to the Oklahoma Corporation Commission, but also corrupted subsequent appeal proceedings at the Oklahoma Supreme Court in 1991.

But just days before Christmas 2017, the state’s highest court issued a decision upholding the OCC’s dismissal of the AT&T bribery refund application while completely ignoring both the new evidence of fraud and the constitutional questions about bribery raised in the applicants’ appeal. Notably, Chief Justice Douglas L. Combs dissented from the decision of the court’s eight other justices.

The Fight for Justice at the United States Supreme Court

Undaunted, in early January 2018, the AT&T bribery refund applicants formally announced their intention to take their fight for justice to the United States Supreme Court in a filing before the Oklahoma Supreme Court. Their petition for writ of certiorari, asking the nation's highest court to hear their appeal for justice, was filed on March 19, 2018.  In the petition, the applicants argued their "right to petition" under the First Amendment was violated when the OCC dismissed their bribery refund application "with prejudice," prohibiting them from ever raising the issue again.   

In addition to guaranteeing rights to freedom of religion, free speech, free press, and free assembly, the First Amendment to the United States Constitution also guarantees citizens the right "to petition the government for a redress of grievances."  The 2015 bribery refund application was, in effect, a petition asking the OCC to redress the grievance (or, correct the injustice) of AT&T’s bribery in 1989.  

In their petition, the bribery refund applicants argue that the OCC went too far in its attempt to end forever their efforts to "correct the effects of pernicious bribery," violating their constitutional rights in the process.  Quoting the dissenting opinion of OCC Commissioner Bob Anthony (who voted against dismissing the bribery refund application), the applicants told the U.S. Supreme Court: "[H]ow can the Majority recognize that the [bribery refund] application is 'legislative' …, but still dismiss it 'with prejudice'? Such a legal finding is oxymoronic."  If the high court agrees, it could send the case back to the Oklahoma Supreme Court for further review.

"[D]enying citizens the right to further petition their legislative bodies on legislative matters – especially matters involving proven public corruption – threatens and undermines our very republican form of government," the petition further argued.  "The high importance of this case to the public interest, both from a monetary standpoint and from the standpoint of harm done – now and in the future – to 'the good order of society,' warrants review[.]"

The U.S. Supreme Court is expected to rule on the bribery refund applicants’ petition before the end of its term in early summer 2018.

Thus, the fate of the $16+ billion AT&T bribery refund case rests in the hands of the nation’s highest court. The applicants and Oklahomans Against Bribery continue to believe the law is on their side – that bribed votes don’t count and that AT&T should be required to refund all proceeds from those ill-gotten gains to the ratepayers of Oklahoma (potentially $10,000+ per AT&T/SWBT landline from 1987 to the present).

 

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