00001 COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING BEFORE THE COUNCIL COMMITTEE ON FINANCE - - - Room 400, City Hall Philadelphia, Pennsylvania Tuesday, November 9, 1999 10:45 a.m. - - - BILL 990712 - An ordinance approving the Fiscal Year 2000 Capital Budget providing for expenditures for the capital purposes of the Philadelphia Gas Works, including the supplying of funds to be obtained in connection therewith, and rejecting the Forecast bill for Fiscal Years 2001 through 2005. PRESENT: COUNCILWOMAN JANNIE BLACKWELL, Chair COUNCILMAN DAVID COHEN COUNCILMAN JAMES F. KENNEY COUNCILMAN MICHAEL A. NUTTER COUNCILWOMAN MARIAN B. TASCO COUNCILMAN BRIAN J. O'NEILL - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 00002 I N D E X Ben Hayllar, President and CEO, PGW. . . . . . 5 Dennis Stinson . . . . . . . . . . . . . . . . 10 Vice President, Operations, PGW Al Webster, Director of Customer Service, PGW 19 Reverend Robert Shine, Chairman. . . . . . . . 96 Civic and Social Committee Black Clergy of Philadelphia Joe Given, President . . . . . . . . . . . . . 104 Gas Works Employees Union Abby Pozefsky, General Counsel, PGW. . . . . . 109 00003 P R O C E E D I N G S
Good morning. Thank you very much. The Finance Committee is now in session. Today, we are here to talk about Bill 7 No. 990712. We have students who are shadowing many members of Council. We have one young lady with us today. Her name is Charmin Frank, from Prep Charter High, which is one of my wonderful charter schools that I absolutely love. And we're going to give her the honor of reading the title of the bill. Charmin?
Bill No. 990712, an ordinance approving the Fiscal Year 2000 Capital Budget providing for expenditures for the capital purposes of the Philadelphia Gas Works, including the supplying of funds to be obtained in connection therewith, and rejecting the Forecast bill for Fiscal Years 2001 through 2005.
Thank you very much, Charmin, very good job, and we're very glad to have you here this morning. As many members of the committee have now learned, and we've talked to the members of 00004 PGW, we do have some problems this morning, and those problems include a press conference that is presently going on in front of the Philadelphia Gas Works with regard to the leader, Mr. Hayllar, and some other issues that are going on with personnel with the gas company. Now, we will say certainly that it is our responsibility, and this committee's responsibility, to do everything we can to help the City move forward in a positive direction and certainly to make sure that its citizens are protected. So we will begin our hearing at this time, and we will entertain questions from members of the committee. We did receive some information this morning, a fax sheet that we thank you for, Mr. Hayllar, with regard to billing problems, but certainly, the committee will decide what happens certainly before our hearing ends. And with that let me ask the committee members if they have any questions. (No questions.)
Please identify yourself for the record and proceed with your testimony. 00005
Ben Hayllar, President of the Philadelphia Gas Works. I am here to testify on behalf of Bill 990712, which is PGW's proposed Fiscal Year 2000 Capital Budget. In the interest of time, Madam Chairwoman, I think it would be appropriate if I summarized my testimony since you have it in writing. With me is Vice President for Operations, Dennis Stinson, and numerous other officers from PGW who are prepared to answer any questions that might arise. PGW seeks the approval of the Finance Committee, and ultimately the entire City Council, on our Fiscal Year 2000 Capital Budget totaling $59,618,000. The proposed budget supports a program to replace existing plant and facilities and some level to acquire new assets. The proposed Capital Budget reflects the continuing refocussing on our core business functions. 9 million, is requested to be allocated to our distribution, field service, and gas processing areas. 6 million, is directed primarily toward transportation and 00006 building facilities requirements. The remaining request is to be authorized for new systems and technology initiatives. The Year 2000 Capital Budget includes $14 million to complete the first phase of the LNG, or Liquification Plants Program. Prudent replacement of liquification is critical to ensure the reliable gas supply since plant failure could impel PGW's supply for design day and supply requirements. 3 million for new-customer 18 requirements. 8 is allocated 21 for the installation of the Automatic 22 Meter-Reading Program. 7 million is for vehicles and mobile equipment replacement. 6 million. 1 million for new application systems, including material and purchasing systems and a new payroll system. Before we go forward, I would point out what I think every Councilmember knows -- that we have completed the installation of what amounts to the heart of the company, and that is the billing, collection and customer service system. This is the computer software that allows us to maintain over 514,000 individual accounts, histories of their billing and their payments, and is basically the center of where a customer goes to PGW in order to have their problems answered or fixed. We converted to the new system on July 5th of this year. Within the first month, it was recognized that there were a series of errors in the conversion that took place. Some of them seemed to be relatively minor, but as we worked through most of the areas during the course of the summer, it became obvious to everyone, including our customers, that there were some serious 00008 embedded problems in the new system that we are still dealing with. I have given you a handout, at the request of the Chairwoman, dealing with the problems that we are currently confronting now. Many of the problems that we have encountered over the summer have been fixed, but these are the ones that I think are most significant and are still requiring remediation. Of the 512,000 customers, most bills that go out are accurate, but significant pools of inaccuracies are out there. For example, we have bills that have not been received. Sometimes we are now -- we are holding bills to make certain that they go out without errors in them. Every day, we send out approximately 22,000 bills, they get mailed. We've held some right now simply because we know there are errors in those cycles, and we want to get those erroneous bills out. The biggest problem we have right now is that the estimation device on bills for customers who do not have automatic meter-readers, whose bills are estimated, the logic that has been prepared by the vendor is incorrect. About 20 00009 percent of our bills are estimated, so we have a significant issue concerning finding a correct way to estimate our bills. This has been a reoccurring problem that, of course, has resulted in, as of yesterday, I think we had some 12,000 phone calls on billing alone to the call system, which we're simply unable to handle in a satisfactory way.
We've had some budget bills that have been inappropriately cancelled. We believe we understand the problem there and are fixing it. Bill messages appear on bills that may not be related to the bill itself. For example, suggesting that people will be thrown off the budget program when they're not on the program, where the messages have been removed until that problem is fixed. Customers who are on payment agreements often have their bill computed correctly, but the box saying "Please pay this amount" shows "0" on it, which is another area that is causing us a great deal of concern. You have in front of you the list of, I think, our top problems to date. We believe that 00010 they can be worked through, but we make no excuse that these are problems that are confronting us and are seriously concerning our customers. PGW has undertaken a philosophy that we are accountable to our customers for what do. We stand accountable for fixing these problems and providing the service that our customers have a right to expect from us going forth. The Capital Budget before you would allow the company to continue to maintain its essential infrastructure to supply natural gas safely to our heating and our other users for the next year. We ask that Council approve the authorized Fiscal Year 2000 Capital of Budget of $59,600,000. I will be more than happy to answer any questions that you may have. Thank you.
All right. The Chair will now entertain questions from the committee. Councilwoman Tasco? 00011
Mr. Hayllar, you talked about your information technology system. Could you give us an idea of where you are in the revitalization process for getting this system up to speed?
We have retained about two months ago Ram Technologies and Myra Management who have done extensive work on City installations of this nature. They have been on site. They now have, I believe, five people in the building, assisting the IT people in getting their arms around these problems. Much of the problems that we have seen over the last six months have simply been bad data being put through the new system and turning out bad bills or incomprehensible bills for some people -- not all, but enough to cause a serious problem. Ram has instituted procedures that we previously did not have, protocols that we did not have, so that we would stop literally shooting ourselves in the foot. For example, we would often put in a 00012 fix to a problem without testing it in a proper environment first. And if the fix didn't work, we created a whole new problem. These procedures, I think, are essential to being able to resolve these remaining issues and reduce the amount of bad bills going out and the calls before us. We've also retained Sherry Rubin, who will be the new Chief Information Officer. She comes to us from MOIS. Most recently, she has been the Chief Information Officer for Community Behavior Health. They are a $400 million managed-care nonprofit. Then she has seen many of the problems that we are confronted with now, and when she went to CBH, was introduced to the same kinds of problems that we have seen. She starts on the 15th of November, but she has actually been part-time at PGW for the past week.
Is there any kind of ongoing training for the employees on the system?
Yes. Al Webster, who is in charge of the customer information, the Customer Service Center, can, I think, speak more completely about the training that has gone into 00013 -- that has been provided to our customer service reps and others who are now manning the phones. We have on an average day now almost 100 people dealing with the phones. Some of them are not experienced but are taking only, for example, service calls. That has assisted us in getting calls answered, and particularly calls for service, where we're doing, I think, almost an adequate job. It's in the billing area -- which is the most difficult area to work because you have to understand the billing system very acutely -- that we have fallen behind. We do have ongoing training -- we are training people who have not been experienced on the telephones. They have performed quite, quite well. And that has been helpful to us in that we've had to avoid an issue of going to an outside vendor and creating a capacity problem with our union. Right now, I think we have almost 100 people. Many of them have been trained just for this assignment. They've done quite well.
So those are employees who were taken from other departments?
So what is not being done now in those departments they were taken from?
The biggest problem we've had is in the collections area, in collecting past-due accounts. While that is being done to a limited degree, the collections people, who are very familiar with the BCCS system and very familiar with the billings program, they have been back-stopping the customer service people for much of the day. They have also been doing LIHEAP calls, where we call LIHEAP recipients, or people who would be LIHEAP recipients with low-income indicators to make certain that we get that grant for the coming winter season. The biggest deficiencies have been in collections. Much of that was caused by the fact that the system does has not yet provided the detailed information that the collections people need so that they were going to be without some of their essential work to do anyway. We have fallen behind in correspondence. I know that we have fallen behind in cases brought before the Gas Commission where 00015 there are appeals, and we normally were able to address the case back to the Gas Commission in a reasonable period of time. That is backlogged. Field collectors have been on the phones. They now spend the first hours of the morning in the field doing collections. They have been on the phones during the rest of the day, doing -- for people who are not considered to be computer-literate, they've really done a superior job. They will be back in the field collecting very shortly. We believe that that part of the wave of calls is behind us.
I would like not to be embarrassed by the end of the year. That's not a complete fix; there's always going to be something. Also, we believe that there were things that should have been done initially that were not done with the BCCS system that we're going to have to put in. So we'll be limping for a while. But the problems that we are confronting right now, I would like to have it done by the end of December. 00016
So this company is putting the plan in place or working to reach that goal?
It's an ongoing process. What we want to do is stop creating a new problem by something we've done, then generating a new problem that needs to be fixed. We want to have the criteria, the protocols that make certain that when you've corrected a problem, you're not creating a new one, and then correct these problems I have on the list. With SPL, since it's their logic that does the estimation on a bill, I mean, we're hoping that within a few days, we'll be able to end this problem of the estimated bills.
Well, in a perfect situation, if your system were up and working 00017 properly, how many employees would be working on the system, and how many of these 100 employees would go back --
-- to their jobs? 'Cause while you have them over here working on this problem, then you're exacerbating other areas where they are not getting attention.
Because we have gotten calls about people who've sent checks in and the checks haven't been applied to their account.
I think that problem -- we had that problem -- I think that problem has been fixed. We're not aware of posting problems within the last few weeks. That's not to say that it hasn't happened, but I think that's a problem of previous months.
People who write us letters with a, you know, a problem, and we haven't answered their correspondence. Now, some of it got fixed anyway. Some of them got back and got through to us on the phones, but it's piled up. And, normally, you want to know that everybody who sent you a letter at least got some kind of a response.
So given a perfect world, how many people would be on the system? And how many people would --
I believe it's 65 on the phones. There should be a full-time complement in collections.
Is that -- 65 people in a perfect world, would that be adequate enough staff to handle all of the telephone calls?
With this system, with this system, we believe that it could be done, with perhaps even less, but we don't know. Hang on a second. (Mr. Hayllar confers off the record with Al Webster.) 00019
This is Al Webster. He's responsible for -- he's a Director in Customer Affairs and is responsible for the --
I'm Al Webster, the Director of Customer Service for the Philadelphia Gas Works.
A perfect day would be that we would have anywhere -- about 65 individuals that have started on our shift to take care of our phone calls that we have coming in. Those individuals would be assigned to handle those calls, and we would have a staff that's in the evening that would complement that as well, that would take our calls up until 8 o'clock in the evening.
So if someone were calling during the day and you had 65 employees on 00020 the phones, they could get through and not get a voice mail?
Even in a perfect world, they may have still a waiting time, but they will get through eventually, yes. In a perfect world, we're hoping that our customers would not have to wait any longer than about five minutes or less to get through to us.
Mr. Hayllar, are there enough resources in the proposed Capital Budget to fix the problems? And if not, where will PGW obtain these funds?
The Gas Commission has for quite some time raised the issue of the simple replacement of pipe underground, particularly cast-iron pipe, of which we have about 1700 miles. We have increased the allocation for the replacement of cast-iron pipe, but we are hoping that in the course of the next six months, we will be able to, through a swap of fixed to potential --
I'm talking how you're going to fix -- the resources to fix the computer problem.
Oh, okay. We are -- one of areas that we hope to increase our allocation and come back to the Commission and Council is in the area of pipe replacement. In the area of technology, we believe that we can stabilize and get this system working appropriately. However, there are pieces that are in this budget -- for example, a materials processing unit that should have been installed and it wasn't. And what the lack of this procurement piece does is, it makes financial control of contracts much more difficult. So we believe that we need to install that next year so that we will have much better control of our contracts. Contract control, the ability to monitor that we have not exceeded the term or the amount on a contract, has been a serious problem. And by removing this module when the system was installed, it precluded us from being able to monitor appropriately our contracts. And that's a high priority. 00022
Well, I think my question was, in order to fix your information system, do you have enough money? And if you don't, where do you plan to get the money from?
We hope that we have enough money available. If we do not, we come back to the Commission and to City Council.
What was the initial cost, budgeted cost for the system, and how much is the overrun?
The approved amount was $9.7 million. That was approved for billing, collection, and customer service amount. To date, we have spent $25 million. So the difference between 9.7 and is the unauthorized expenditure 17 that amounts to the cost overrun. 18
Is the Board 19 familiar with this situation, the PFMC Board? 20
They started asking for 24 accountings of the BCCS system. I know one 25 request was made by one member in July, and I 00023 believe there were requests prior to that. That information was not forthcoming in a meaningful way. Only in October were we able to secure -- the corporate counsel able to secure, with the help of other individuals in the company, an accounting of how much had been spent.
What is the responsibility of the staff to the Board to inform them of what the operation is of PGW?
I believe it is the absolute responsibility of every employee to keep their superior, their supervisor, aware of any problems that exist. And, certainly, it is the responsibility of senior staff to inform the Board of any problem that they know to exist. Regrettably, we've had a culture where problems were kept under wraps in hopes that perhaps they would go away, and that has proven to be an extremely dangerous practice.
Budgets submitted to the Philadelphia Gas Commission, are they reviewed thoroughly? Well, we can't answer that question. Are they reviewed by the Board? And at what point do you give that budget to the PFMC 00024 Board for review prior to coming to the Commission?
The Board reviews the operating budget, I think, quite thoroughly through its finance committee and also through its own deliberations. As a matter of fact, this year, I think it took the Board two meetings to approve the Operating Budget before it was sent over to the Gas Commission. The Capital Program is done in the same way, but I think with less intensity than the Operating Budget, 'cause the Operating Budget tends to be the more defining document in the future of the company.
One question, and then we will go to Councilman Nutter. The current list of the billing problems that you provided and that we're glad to have, when did you say these will be corrected?
I am hoping that it will be stabilized by the end of December so that the situation which we currently have where we repeatedly send out the same kind of bad bill, the same error, which is overcrowding our Customer 00025 Service Center, defined by that level, that we will be in seriously better shape by the end of December.
One last question, and then we'll go to Councilman Nutter. As a follow-up, Councilwoman Tasco asked about a budget that you then go take to the PFMC Board. In other words, we assume that you are the top officer of "the buck stops with you." In terms of -- all of my information is that in terms of all billing processes and monies spent, that your system is such that all paperwork has to be okayed by you before it goes any further; is that correct?
Under the current payment system, each officer has a payment threshold or a limit that they can sign for. In the case of BCCS, the payments were made either through the Chief Information Officer or the Chief Operating Officer.
Everything 00026 that the Chief Information Officer and the Chief Operating Officer sign off on that affects all the citizens of Philadelphia, don't you see those records?
No, I do not necessarily see those vendor payments. Those are invoices from the vendor, and they are reviewed at that level and paid. I wouldn't see them. I would see only the largest dollar amounts -- and I can't remember offhand what my limit is. But after a million dollars, it has to go to the Board for approval.
So you only see what you send to the Board, is what you're telling us. You don't sign off on everything that deals with public dollars, then, is what you're telling us.
No. Depending on the size of the invoice -- and this is the payment of the invoice for work done -- the dollar amount of that invoice determines who has the authority to approve it. 00027 In terms of the contracts that are let, those contracts were let, I believe, in '96 and in 1997. And while the Board approve the budgets and contracts for certain projects, they do not see, nor the Chief Executive Officer would not see the individual payments that occur on an ongoing basis after that. That's principally the CIO's job.
Who's tracking the budget, Mr. Hayllar? If you have a $16 million cost overrun on your information system, who knows about that? And at what point do you know about it?
We knew about it much too late. The tracking should have been done in the CIO's office and in the information technology area. And there should have been long ago red flags throughout the system so that people would have gone back to the Board and said, We cannot complete the system within this budget; we will need the authority for more. And that didn't happen.
So how did you get 00028 the million cost overrun? Was it in the budget?
The Board most definitely 16 was not aware of it, and the Board repeatedly was asking for an accounting and did not get an accurate accounting.
How are you, the CEO, in control of the company if you aren't aware of what is going on in terms of the spending?
You're not. That's the point. That's the point. If people are spending without --
What controls are 00029 in place? Which we have asked for before when we were dealing with the Hawes situation. What controls are in place to monitor the spending of PGW?
The fundamental control, the procurement module that I spoke of a minute ago, that was not installed. So that people who paid the bills, unlike in the City of Philadelphia, where invoices are sent in based on a contract, they did not have a knowledge of what the time limit of the contract is. In other words, that the term of the contract had been expired; nor did the people in treasury who paid the bills know what the amount in the contract was. So that once it was exceeded, they had no 17 way of knowing to stop payment. They just continued to receive the invoices and were told to pay them. And that is a completely inappropriate system.
How do they track it? You have a budget, they know that we approve a certain amount for expenditures. So no one in the Treasurer's Office -- 00030
They don't know that there's a limit on how much they can spend, so that they can just spend infinitum?
No. The Treasurer's Office simply pays the bills. They had no 8 controls, such as is found in the Accounting Department, the Depart of Finance in Philadelphia and in the Controller's Office. They had no 11 documents to tell them that this contract had been exceeded. They just simply got bills and paid for it. The accounting was supposed to be taking place in the Information Technology Department, and they were supposed to be managing their contracts. And that clearly was not being done.
That absolutely does not give us anything to take to the ratepayers about who we're paying and why. If you, the former Finance Director for the City, and you are the head of the gas company, and you say that there is no system, then why did you not then take steps to install one? How can we tell John 00031 and Jane Q. Public that money is spent and there's no record, and that when it goes to the Board for their approval, you haven't okayed it, and maybe two other people have, and we don't know where that money is, where it starts and where it stops. That's what you're telling us, that there's no system, so, okay, there's just no 10 system.
Well, we are moving far along to have the system where every payment is supported by a contract and the contracts are monitored. The corporate counsel's office had worked out a system to install the computer piece that was missing so that it could have been done this winter and this fall and completed. But it was never implemented by the IT people, for whatever reason.
I don't understand any of this. I don't understand how we can sit here and be asked to okay a capital budget of this size and be told that there's no real system but we should just continue the status quo, that, you know, we kind of gotten along this far 00032 and that it's okay, let the citizens pay.
We have got to sit there and listen to senior citizens who can't pay, senior citizens whose bills goes up every year. It's tough enough to try to explain to them that your gas bill is dependent upon the cost of gas, but when they hear this kind of confusion, I can't explain to them what their billing situation is because I don't understand it myself and why you can't give us clear answers on what billing is at the gas company, especially given the current social, political, and economic situation that the gas company's facing. I don't understand how you can come here and not have clear-cut answers to such simple questions. I don't -- well, maybe you do have clear-cut answers, maybe the answer is that there's no real system in place and when we get it straightened out, it's okay. That seems to be what I hear. Let me defer to Councilman Nutter now.
Thank you, Madam 00033 Chair. Mr. Hayllar, what is the current upper-management structure or team? There have been so many departures and arrivals here recently that PGW almost looks like Philly International Airport. Who's working there now and who's not there and who's in charge?
The Operations -- Vice President of Operations is Dennis Stinson to my right. That is all the field activity in the company.
About 30 years ago, and he has been in this position for a long time. He will also be given the responsibility for certain operations, support systems that were under somebody else. They're combining that now under him.
They were under a separate vice president. They were individuals 00034 who reported to the Chief Operating Officer, Mr. Bridges, who will report to Mr. Stinson 'cause it's all operations support. We will also have the liquification plant operations, which were previously under gas management. Craig White will be responsible for -- is responsible for marketing and will be responsible for gas procurement. Bud Karachiwala who I believe you've met, will be responsible for state regulatory affairs. It's an entirely new operation that must be constructed.
Abby Pozefsky is Corporate Counsel. John Straub is Vice President for Human Resources. Sherry Rubin will be the Vice President for Information Technology, starting Monday -- though she is there now. Peter Yaffe is Vice President for 00035 Public Policy. And the Chief Finance Officer position is vacant, but Mr. Bob Denovitch (ph.), Mr. Golden, and Mr. Gallagher function in their areas of treasury and budget in that area. Oh, and Karen Sweat is the vice President of Customer Affairs.
Now, what happened to the -- the three top positions are President and CEO?
The Chief Financial Officer position, we've held vacant for a number of reasons, one of which is a scenario in which I 00036 have some experience. It was not an area we needed to fill immediately.
The Chief Operations Officer was Gregory Martin; he was placed on administrative leave, and the Board has terminated his employment.
Oh, okay. I just wanted to make sure I wasn't late on my news. Okay, so that was as of this morning.
Okay. And the purpose of that was. . . ? What was the reason for his termination?
A number of reasons, one of which is the unauthorized expenditure of money for BCSS. Another reason was, it was found that the company paid for work on his private 00037 residence, which is, of course, completely inappropriate.
Well, the one, I guess, you were engaged in back and forth with Councilwoman Tasco and also Councilwoman Blackwell is still not completely clear to me how you have the numbers upwards of $16 million in unauthorized expenditure for this BCCS system. You're saying it happened because no one knew that there was a $9 million limit?
I think the people who were doing it knew that they had exceeded the limit, but I think that they believed that with just a few dollars more, they could get it to work and make the conversion. They just didn't --
Yeah, and it went on and on. They certainly weren't sharing the information with anyone. 00038
Well, I mean, if you said that it went from to 10, I mean, that 6 might be in the category of "a few dollars more." 7
But 9 to 25 is 9 obviously not a few dollars more. So, I mean, we do end up going back to the discussion of, how do you spend $16 million that's unauthorized, even for what I assume is a good purpose? Although there doesn't appear to be an end in sight at the moment. I mean, did you think that everyone was going fine at the $9 million level and that they were just, you know, everything was peachy-keen?
I wasn't there at the $9 million level. The information that --
When were you there? Well, you've been on the Board for --
I've been on the Board since '94. I have been the part-time acting president since November of last year. I have been President since October of this year. 00039
Okay. So you were on the Board, and you voted on the $9 million authorization?
Okay. And what kind of updates would the Board get on this project and what the spending levels were?
Periodically, they would get reports from the CIO on the progress of implementation -- of not this, but the other 00040 projects that were underway. It was a massive rebuilding of all the infrastructure of the company. I believe when we go back and look at the reports that were given, that some of the information given to the Board was just plain wrong, that they were showing an expenditure of $12 million at one point, when the actual expenditure, after we looked at it recently, had exceeded that by many millions of dollars.
Well, I assume 00041 that. Was the Board told that they had reached the million limit? 4
The Board inquired and got reports that all is well. The Board inquired again in July of this year during the --
So the Board of the company asked the management team what's going on with the BCCS system installation and what the dollars are to date spent. And you're saying that the response was, "All is well"?
I think the Board became increasingly dubious about the scenario. The 00042 fundamental concern was to make the conversion, and we had a Y2 issue coming -- it was done on July 5th. The accounting information that was repeatedly requested by the then-acting CEO and the corporate counsel was not forthcoming -- until, I guess, the fall or September -- it started coming, I guess, in September of this year, from other sources.
November of last year. So when you became acting CEO, did you inquire as to what the dollar amount that had been spent was and what the progress of BCCS was?
That while there was a general spending of -- that more money had been spent than anticipated, that they were well within the overall budget. And that's not the case. What was happening is, they were taking -- they 00043 were not doing certain things in other information technology initiatives to move money into BCCS. That was not something that was explained by the IT people at the time.
Okay. And then you said in April, you were told that it was $12 million?
So what happened at that point? Even if 12 million was wrong or under the amount that it may have been actually been at that time, 12 is obviously more than 9. So did anyone put the brakes on or say, Why are we 3 over? Or where is this thing going?
I think the fundamental concern was to get it done. Nobody realized, 'cause nobody was told, that that amount of money was going out the door principally to one vendor to get it done. Efforts to get an accounting were met with lack a of response, particularly when the corporate counsel was attempting to get that data 00044 and could not get it from the IT section or from the IT section superior.
Well, I mean, what is your, I guess, level of involvement or responsibility at this stage or at those stages or going back to the fall of last year or whenever you -- I mean, you've been in a number of different positions. I think we had some of this discussion at some hearing.
You were a Board member and acting President and CEO and Finance Director all at the same time.
I mean, what -- some of this happened at the time that your involvement increased.
My belief is that when people believe that there's an opportunity -- that they may outwait you, then --
That they may outwait you, that sooner or later you're going to be gone -- probably sooner -- they're not forthcoming with information, particularly if it's bad news. PGW suffered from, and suffers from, a culture of hiding problems, particularly in the financial area. It's not healthy. I believe that the people responsible just thought that I would go at some point and that they didn't have to -- they wouldn't have to respond. Once the affirmation of my appointment was made and then I started full-time on October 1st, the amount of information we were able to get was vastly different and vastly better than prior to that, because at that point, I was part-time and I was perceived as someone that would not be there.
Your answer, though, leaves me with the impression that you, even though you were in position as far as back as the fall, you have no responsibility until sometime here in October of 1999, because people were either spinning you around or maneuvering around you or not being responsive. Now, I mean, 00046 that's a non-responsive response. What's your overall responsibility in all of this?
I believe I am -- my error was to accept information that I was given without double-checking it, without trying to verify it. I was given incorrect information and told it was true, and obviously, I'm responsible for accepting that. However, we continue to try to --
Did that happen to other people in the company as well?
And is their level of responsibility or error the same as yours?
I think they tried very diligently to get information that was withheld from them. I accept my responsibility throughout the period of time from '94 to today when there were certain errors that have made. I didn't make them, I didn't do anything dishonest, but I can't 00047 say that about other people. But I have to be, perhaps, the easiest guy in the world to lie to, because that's what happened for that period of time.
There are occasions where individuals falsified reimbursement requests so that they would get money that they were not entitled to.
The relocation costs which one individual was entitled to, the cost of the sale of the principal residence which --
I mean, haven't all those issues been the topic of various public hearings over a year or so ago? I mean, we're not back to relocation expenses, are we?
Well, I think we will be next week because the District Attorney has been vigorously looking into this and has been for 13 months.
I'm talking about currently. You made a statement that people have been, I think, dishonest. I'm asking you for current examples of dishonesty.
Oh, in this contract? No, I don't think people were dishonest regarding this contract. I think they believed that if just get a little more done, it would work, and they just kept putting money in it. I don't think there's anything dishonest in the BCCS. I know of no reason to believe that.
Okay, well, that's what we were talking about. I was wondering --
When I asked you, Like what? that's what I was talking about.
Okay. Now, with regard to this security system issue, again, how 00049 does your system allow something like that to happen? How does somebody -- if the allegations are even half correct, how does your system allow a company to pay for something for someone privately at a non-PGW-owned property? How does that happen?
In writing, the CEO at that time authorized the installation of security, $5,000 security systems in the houses of the CEO, the CFO, and the COO. And that authorization was given to the appropriate person who had a contractor go out and do it.
Based on whose request? Who requested that -- on whose advice did the CEO authorize that?
Hang on just a second. I'm sorry. (Mr. Hayllar confers off the record with Ms. Pozefsky.)
I am advised by corporate counsel that the request was made by the Chief Operating Officer to the CEO.
And on whose advice did the COO request the installation? 00050
Was there a recommendation by the security forces at PGW that that should happen?
So the system is set up such that the President or the COO or other high-ranking individuals can, whether or not there was a recommendation -- and maybe there was and I wasn't around for that Q and A or whenever that took place, but again, I guess I'm just slightly perplexed that a system would allow the installation of any equipment or any work to be done at a private residence that's off PGW property.
That's absolutely -- your astonishment is shared by many others. It was ordered, people implemented the order, contractors went out, and in one case, did not put in one system -- but because that system, which was then $7,000, was not to the individual's liking, they 00051 went back and put in a $10,000 system. So now we have the one house with $17,000 worth of security systems in it.
Well, what's the Board's responsibility in all of this? I mean, what's the Board doing?
The Board has responsibility for the direction and the oversight of the company.
Well, if that's the case, then how did these things happen?
Because they were hidden. You can hide an awful lot of stuff from people if that's what you want to do. And that's what they were doing.
Mr. Hayllar, last year when we were here regarding the credit cards and all of that, we talked about, and I believe you testified that you all were going to put in place an internal audit system. 00052
Much of it is. The piece that is missing is the procurement system that I talked about several times. That was not done. But internal audit is functioning, and they are at work. The Treasury Department has been charged with the much more --
Let me just -- see -- I mean, how did the place run before all of this technology came around? And was all of this kind of activity going on? I mean, you can have all the technology in the world; if you don't have written policies programs and some common sense and a sense of ethics about what you do and how you do it, all the computerization and software in the world is not going to help.
The problem was that there was no method in which the people who physically paid the invoices could compare that 00053 invoice to a contract. In fact, over the last three years, the number of contracts that are written, we got fewer and fewer. People had what they called "signature authority," where the boss told you to go buy this and you go buy it.
But let me say, Councilman Nutter, when you talk about ethics and a sense of right and wrong, you're now dealing with the essential ingredient that was missing in a lot of these instances.
Okay. Well, tell me about this: did you get one of the 76ers schedules in the mail?
Now, why are people getting 76ers and Phillies schedules in their PGW bills?
The 76ers -- the large reason is because we want people to look at the stuff that they get in their bill, other than just 00054 the bill. So if you send them something they might be interested in, they'll look through the material in there. There's a newsletter, there's often notices.
I'm sorry. What did you say earlier? If you want people to do what?
I want them to go through the envelope that the bill comes in, other than just to look at the bill 'cause there's a newsletter --
Because there's a newsletter that contains information that's important. We want to increase value of the mailing. We send out a half a million pieces of mail to most residents of the City every year, and that's of value, and I'd like to enhance it. In the case of the 76ers schedule, that has our logo on it, which is a form of advertising, and people save those to have the schedule. The ratepayer did not pay for that. It was done -- the printing was done at the cost of the 76ers. We simply stuffed it for them and sent 00055 it out. So it was no cost to the ratepayer.
Those who are 76ers fans have, as many of us do, a schedule sitting on their desk or their bureau with the games, and it's a value to the company in that there is a logo on it PGW. It's to replace in small part --
Do you really think somebody's going to forget about PGW? (Unintelligible; parties talking over each other.)
I don't think 500-and-some thousand ratepayers are going to forget about PGW.
But I'm still perplexed to understand the connection between that and what you do and what your core business is, or with the Phillies earlier this year. 00056
I wrote to Mr. Driscoll about it; he chose not to respond to that letter back in August.
Yes. There is a few thousand dollars for the printing cost. Now, the 76ers --
Well, don't you have a fairly serious financial situation?
Yeah, but we also have a budget for advertising, and it came under that.
And the value to mailing the Phillies schedule was what?
Same thing. It's advertising, it's something that has a long shelf life and people keep it, and it's something nice to give to the customers. 00057
Maybe we should let the Phillies and the Sixers worry about getting their schedules into people's hands and not through PGW, since it's fairly clear that you have enough trouble getting the bills right, getting them out, running the company. It might be a little less to worry about who has what schedules. I mean, have you ever gotten any complaints from PGW customers that they don't know when Phillies or the Sixers are playing?
Well, people will thank you for virtually anything for free. I'm talking about doing what you do and trying to do that well before you worry about advertising.
Thank you, Madam Chairperson. 00058 Mr. Hayllar, you said there's 500,000 PGW customers?
There's about 512,000. There's about 487,000 that are residential.
487 residential. Of that 487,000 residential, how many currently are on automatic meter-reading?
Dennis Stinson runs this program. Instead of him whispering in my ear, I think it would be helpful if he answered.
So it's 75 percent 22 outstanding commercial customers. 23
And commercial 25 customers generally aren't the problem. It's my 00059 understanding that it's the residential readings that are the most problematic.
The residential readings are often the most difficult to get into, yes, sir.
We are actively working, though, on completing the commercial-industrial customers with the AMR device.
The 80 percent residential customers, their bills are based on the drive-by with the computer?
Of that percentage, of that 80 percent, can you give me a general percentage as to what you think are bills that are incorrect out of that grouping? Or are there --
My understanding is that if we have an AMR read in the current month --
If we have an AMR read in 00060 a current month for that customer, they get accurate an accurate bill, if there's nothing else wrong with the bill process.
It's the customers who get an estimated bill for some reason that seem to have the biggest problem with getting a bill.
So during the summer, Councilman, there was a period when the Itron units were converted through Y2K, and for one month, some of the automatic meter reads, the one that we assumed were accurate, went out inaccurate, and it had something to do with the Y2K patch that they put. We are unaware of that problem reoccurring on AMRs.
So how many incorrect bills were issued relative to the Y2K patch on current AMR customers?
Okay. I mean, do 00061 you have any idea as to how many calls came in on that one glitch?
Could we find out how many people were affected that -- so I understand, basically, you're saying that of the 80 percent of the people who are currently under AMR, it's very unlikely that they're going to have a problem with their bill.
But there was a short period of time where, because of this Y2K patch, there was some little problem.
So we're talking basically here about the percent who are not 19 AMR, who are getting estimated bills that are 20 incorrect?
Of that group, 00062 isn't there a history of gas usage for those customers? I would think that many or all of those customers have not been on this system for less than a year, that there have been years of prior usage that you could compare to in order to determine what it was they used in February of '98, you know, in December of '97, March of '96, in order -- so that the comparison could be made that we're not that far out of whack, so that people aren't getting 0 numbers or $640 numbers, that in some way, we have a history of the people who have paid their bills on those residential properties over the past, say, 10, 15, years. 15
That's correct. The 16 problem is the volume of bills that got out each 17 night. For each cycle, there's about 22,000 18 bills, and you cannot manually go through all of 19 them to find those errors. What we have been 20 installing in the last month is a quality-control system that, in fact, eyeballs every bill, and that's how we've been catching them.
But can we not segregate the AMR bills? Of that 22,000 per month, a certain percentage are AMRs, a certain 00063 percentage are non-AMRs and estimated. Now, of the people who have actual readings, not AMRs, they are accurate, generally?
Okay. So we're even talking about a smaller pool of people. Of that 22,000 per month, we should be able to segregate which of those are non-AMR-estimated people.
We are now trying to do that. We are today testing a system that the vendor has put out, that would pull out the estimate reads so we that would send out the correct AMRs and then correct the problem with estimation. You are correct.
For how many months have we experienced this glitch, or large glitch, of incorrect estimated bills?
Well, I guess my question is -- and, again, I mean, hindsight is 20/20. Why not in August or September had we not said, you know, in order to be safe for both the company and the customer, let's pull those people 00064 out and look at what they paid in August or September of last year or the year before and bill 4 them based on that, because it's probably going to be about the same amount of money anyway.
You are correct. That should have been done. Once Ram Technologies got into the system and began to understand it and once these other areas were fixed and we began to see these principal problems then, we were able to do it.
Now, I haven't been -- I'm not on the Commission, and I haven't been in the midst of this. The company who did the AMRs Itron, correct?
And the company who handled the computer system is BCCS?
And they were separate from the contract with Itron. 00065
So the Itron contract is over here, and this $25 million is for the --
Okay, okay, fine. Now, is there any form of audit that's going on now as it relates to the BCCS contract, as it relates to the problems that we've experienced with some of the executive expenditures that have caused and created so much controversy? Are we not -- either the City Controller or an outside auditor or the Inspector General or someone taking a look at this entire contract, what was billed, what was paid, who it was paid to, and what the purpose of the billings and invoices were?
I believe the District Attorney is doing that as part of that investigation.
I believe so. Secondly, we have charged Ram 00066 Technologies to a forensic audit of everything that took place in the past. Their principle goal is to get it stabilized and fixed, but they're going back through the history of the contract as well.
Ram Technologies is a local organization that's been used by the City in a number of areas with Myra Management. Water billing was one of them. They have five people on site full-time.
All right. And what's the level amount of that contract?
Each for $200,000. One is in the City Finance Department, and that is the area dealing with the forensic audit of what's happened simply because -- 00067
And that's because that's inappropriate for the owner to deal with. The other piece is a PGW contract, which is for the remediation and the stabilization of this system.
Okay. Now, will we potentially be considering any legal action against the BCCS vendor and/or those executives that have since been dismissed as a result of the trying to recoup some of the monies that obviously were clearly improperly spent for personal reasons; and, secondly, potentially improperly spent as it relates to the administration of the BCCS contract?
Yes, on both cases. On the second question, the District Attorney has asked -- she asked as of last February for us not 00068 to proceed with civil matters until the criminal investigation was over with. But once that is done, we are prepared to do that.
Is the vendor of the BCCS contract part of ongoing criminal investigation?
We believe the DA has looked at that contract, but that decision -- we don't believe that request pertains to the vendor, and we are looking at the vendor's responsibilities in this problem very strongly.
Now, let me ask you a question. I mean, the District Attorney's Office is a tremendous office and they are very hard-working people, but do they have the capacity to delve into this issue, into the minutia that's there in an effective way? And, again, this is not to denigrate the DA's Office because they do a great job, but is this not something where we would perhaps need an outside inspector or investigator or investigation group, perhaps even 00069 from a governmental agency or from some other? I can't believe that the DA's Office has enough time, considering the workload across the street, that they have enough time to look at this.
They have hired a number of consultants to assist them, and throughout the investigation, they have utilized the resources of the City Controller's Office. And I know they've retained consultants to assist them in a number of areas. And, really, that's as far as know of what her resources are.
Okay. Let me ask you, what's the average amount of time right now for the phone to be answered for a service call?
It depends on the day. Fridays are better than Mondays. On average, I would guess -- and I'll ask Al to correct me if I'm wrong. On average, I would guess that it's about five and a half minutes, unless we're being absolutely crushed.
Well, let me go 00070 back and ask you how many rings there are before either a person or the automatic -- or the automatic answering machine picks up?
That part is almost instantaneous. It shouldn't be a lot of rings. Then you get into the system, and then after a while, you get to listen to our music.
All right, but we don't know exactly the number -- the amount of time. And I'll give you a good example. I'm on the Board of Blue Cross. And one of the things that the Board discusses every month without fail is a report on the length of time it takes for someone to pick up that phone and begin interaction with the customer.
I need to know, and I think if we don't know -- one of the our problems is, we need to pay more attention to that issue, and I know you've talked about paying attention to it, but if we don't know how much time -- and they know over at IBC and other companies like that, they know down to the second it takes on average for someone to be interacting 00071 with that customer.
We know. We have that data. It changes on a day-by-day basis. I gave you, I think, a typical response right now. The other big number we look at is the time it takes our people to dispense with a call, the talk-time number, which has been coming down, which is good. And those reports are produced on a daily basis in 15-minute intervals.
Well, yesterday, we had 12,000 -- no, we had 12,000 billing calls and about 2,500, 3,000 service calls yesterday.
All right. On the service calls, what's the average number of days it takes to respond to the service request?
This morning, it was either the same-day or next-day service, depending upon how early you called.
And the warm 00072 weather had a lot of things to do with, I guess, billing, collections, revenues, lots of problems.
It's not all wonderful things at PGW. The weather has a lot to do with it.
All right. Now, do we find that people are continuing to call and say that they smell guess on a regular basis, whether they smell it or not, because they've recognized that, similar to 911, if you call with a man with a gun, the police are going to come faster, and if you call the Gas Works with a smell of gas, they're coming faster? And have we been able to determine just how widespread that kind of request is made in an effort to get quick service?
Unfortunately, with the tie-up on the phones in the past few months, that has actually gotten worse. More and more folks 00073 call the emergency line in an effort to get quicker service.
Okay. I can come back to some more questions later. Thank you.
I just want to pick up on what Councilman Kenney said. You talked, Mr. Stinson, about the service calls. I have gotten in the last couple of days a few calls relative to -- regarding appointments not being kept. And, you know, one lady had called me at home the other night to tell me that Sunday night, her daughter had made several appointments and then no one showed up. I had a lady call me on Election Day. They had turned her gas off and didn't come back to turn the gas on. I mean, in the last week, I've gotten several calls like that and they're not tied to the BCCS, are they?
But once they make the appointment, what is the process for getting 00074 -- 'cause at one point, I thought that you all had, you know, had improved on the appointment service, that once an appointment, you know, the appointment was kept. What's going on with that?
We've changed the dispatch system in conjunction with the BCCS to a brand-new system, and we're going through a lot of the same learning experiences that the folks in the call center are going through as well -- although it's nowhere near as complex as the BCCS. So it's getting over the hump with this new system in the service end of the business as well.
Mm-hmm. Mr. Hayllar, when the Gas Commission passed the Capital Budget, we ordered your auditor, Deloitte & Touche, to review spending of the IT system against the approved budget. Where is that, and have you --
We've had several meetings with Deloitte & Touche on this assignment. Much of the data has been done internally. They need to test it. I believe that that report is due 15 days after the annual audit is done, and we expect to make that deadline. 00075
And I'll tell you, I'm sure David Veman (ph.), the partner in charge of the audit, would be happy to talk to you or to your staff about any aspect of that.
But I'm asking you where PGW is in fulfilling the orders by the Commission.
On the $16 million, could you tell me, where was the money found to pay for the overrun?
Simply out of capital and operating expenses -- predominantly capital operating. They just drew on it.
All right. So what is going uncared for? If you're taking money from some other area, what areas are you not spending it on?
Certain elements of other IT initiatives were not done in order to make money for BCCS 'cause they consider it to be more important. I've mentioned several of them. The WAMs segment of the mobile dispatch center was not 00076 done simply because that money was not used toward BCCS.
So how do you plan to make up for this $16 million overrun?
Well, we need to determine what must be done over what time from the initial IT plans that we have to complete, and that's additional money that will have to be spent, what can be deferred, and we're working on that now, and I believe the Commission has asked for that information.
What controls have been implemented to ensure that spending authorization requests will be submitted to City Council and the Gas Commission in a timely manner to avoid violating approved spending authorizations in the future? 'Cause you overrun -- you have --
You're supposed to come back to Commission and Council. Have you done that in the past?
No, we have not. I believe that we're doing that in the fall. 00077
Because we're trying to get our arms around this issue as well. And while we know we have to come back before Council on the previous years' overspending on authorizations, we wanted to get this problem solved. It's just a matter of priorities. We know we have to do it.
So it seems to me that if you needed to go beyond the Capital Budget as approved, there would be some checks and balances if you come back to Council --
Well, do you think that's a prudent way to do business?
Mr. Hayllar, what is the cap on your authorization for spending without Board approval? 00078
I believe it's -- on contracts and vendor payments, I believe mine is a half million dollars, and everything after a million goes to the Board. (Mr. Hayllar confers with a colleague off the record.)
I'm sorry. I stand corrected. One of the things we did was reduce that. Everything above 500,000 goes to the Board now.
It's hard to believe that we could focus a lot of time on sending information through the mail and not have a system for how we spend money, the taxpayers' money within the system. There's an old saying that where there's no law, there's no 22 transgression. And there is no way we can understand that we can even pay a dollar to do mailing for the Eagles and not have a real system for how we spend money, who spends it, how far it 00079 goes, and where it starts and stops. With that, Councilman Cohen.
About the transition to the PUC next July 30th -- or June 30th.
Isn't there a pending legislation in Harrisburg to change that date?
There may be. We have opposed it, and I am told that the PUC is not interested in having it moved, so it's not -- it shouldn't be an issue.
You were told the PUC is not interested in taking jurisdiction?
Well, you said you were informed that the PUC was not interested in taking jurisdiction at all.
No, no, that's not what I said. I said that the legislation, which the Majority Leader of the House introduced, was not supported by either PGW or the PUC. I'm told it's not going anywhere, it's not going to move.
Well, that passed, but that had a history. Before it passed, there was a time when it was not passed. In the time when it was not passed, the story was, from good sources in PUC, that they were not interested in taking jurisdiction, that they did not feel as if they were in a position to do that. 00081
Well, I can't speak for them. They have given every indication that they're trying to discharge their responsibilities, but I can't speak for what their view is.
They will be responsible for the regulation of the Gas Works in much the same fashion as any other publicly-owned utility.
It's very much -- there is very much overlap. The difference -- big difference is that currently, the Gas Commission approves the Capital Budget before sending it to Council for approval and approves the Operating Budget. The PUC has not determined whether it even wants to do that or not. But in the law that has passed, they would have complete regulatory authority over rates and standards and performance.
And what is it that the PUC has not decided yet that it wants to do? 00082
Apparently, they are not -- have made no decision about whether they wish to have budgetary approval or anything like that, which is currently enjoyed by the Gas Commission. It's not an issue they've undertaken, to my knowledge -- or a discussion that they've undertaken.
Say that again? I did not get that. What is your understanding as to what they desire to do with respect to regulatory authority?
They will regulate -- the Philadelphia Gas Works sets standards and approves rates, as they do other utilities. The Gas Commission, in addition to that, approves our budgets, approves the Operating Budget finally and then approves a Capital Program and sends it to City Council. That component, the PUC does not -- in the legislation, does not have authority to undertake, and I don't know that they've made any decisions as to whether they want to do it or not.
It's not clear. What you're saying, Mr. Hayllar, is not clear. We're trying to find out the implications of a possible takeover. And also, coupled with that, ask us how all of this impacts the -- since we're dealing with Year 2000 cost overruns from 1999, we've got a lot of issues here that we're not clear on.
And I echo Councilman Cohen's continued questions. You're not being clear about the implications of the State takeover.
I apologize if it's unclear. The difference between the Gas Commission's authority and the PUC's authority is that in addition to standard utility regulatory work, the Gas Commission approves Operating and Capital Budgets. The PUC would only, at this point, take over the regulatory authority, and 00084 they have made no indication whether they wish to assume budgetary authority as well.
Explain regulatory. (Unintelligible; parties speaking over each other.)
Regulatory authority is approving the rates charged by the company, the structure of the company, the tariff of the company, the terms in which the company would have to conduct its business, information it would provide its customers. It could be as detailed as the size and format of a bill. It is all those materials that they can dictate to a utility. And that's the role they would assume as well as --
Does the Public Utilities Commission hold hearings in different parts of the State?
I believe they do. I know they have a hearing examiner in Philadelphia.
I don't know if they have hearings in other parts of the State regarding complaints. I'm advised that they do. Someone behind me said yes.
Well, our understanding is that they do very, very little of that, that generally, they require people to come to Harrisburg if they wish to testify orally. I understand further that they rarely hear oral complaints.
No, I do not. I have never been regulated by the PUC, so I don't know.
What will you do when the courts reverse the legislation and overrule it?
I don't think we have been advised or would advise that course of action, sir.
You know that people generally regard the City of Philadelphia as having been a coconspirator. We're not sure of whom. We know of Representative Perzel, but beyond him, we don't know whom.
We have all been on records as opposing the initial legislation.
Yes, you did. And at the same time, you conducted negotiations to let the State legislature know precisely how you 00087 would like to have it done, if it were done. But you opposed it, you know, like a puff of wind that blows away at the first --
I don't -- I don't think so. I think the Mayor went on record opposing it. We did have to make certain that the PUC understood the underlying structure of our debt so what they did would not cause our tax-exempt status of our bonds to be destroyed. That we did, and we told you that.
Because there is a case in Pennsylvania case law which asserts that once a contract has been entered into with the bondholder, it cannot be changed. And this certainly changes the guarantees given to the bondholders. So I would hedge my bets, were I you, at the outcome.
I recognize that your preparation of the case will be based, you know, on a strong reading of the law, and, you know, we will abide, as we do, by whatever the decision is, 00088 Councilman.
Assuming -- we don't know what's going to happen with the case, but assuming that PGW goes to the PUC in July of the year 2000, and given the financial situation and condition at PGW, do you plan to ask for a rate increase?
Not at this time. And that is not a hedged answer. I do want to do that.
Not at this time, not on November 11, 1999. We do not want to --
I can't tell you where we will be then. We have always stated that the last option is a rate increase. We do not want to do that.
Well, how do you 00089 plan to put your fiscal house in order, and when do you plan to do that absent continuing to borrow and go into debt? And at what point will PGW give an honest, clear-cut financial status of PGW?
I refer you to the Five-Year Financial Plan, which, in 430 pages, describes how we can avoid a rate increase in 2002 and stave off a borrowing in 2003. We recognize it's difficult and we recognize that we have different opinions on the quality of that work, but that's the best work we have right now.
You talked earlier about, when I asked you about coming back to Council, and you said something about coming back to us in the fall to clear up the 1999 budget?
No, there's some authorization expenditures, exceeded authorizations, from previous years, and we need to go back to Council to correct that.
Well, at what point do you begin to look at your books? And I 00090 don't know how you do that since you don't seem to have anybody over there that understands what they're doing, to say we're getting ready to exceed our authority and need to go back to the Commission, we need to go back to Council and get approval before we do this. At what point do you do that?
Well, when is that going to happen? Because in the fall of 1998, you said that you were going to put internal audit controls in place to monitor the spending. That has not happened.
But it's -- well, what needs to happen to control that portion of that piece that is not in place to control your spending? 'Cause evidently, someone over there is not in charge of what money is being spent. Somebody is not monitoring the process. And all I want to know is, at what point do you implement that piece where you'll know that there is a contract for a certain amount of money and that you shouldn't spend beyond that 00091 contract without someone knowing about it, that you, the CEO, understanding and knowing about what's going on at PGW?
We are doing that manually now, but with the piece that was taken out, we believe it can be done permanently and just a part of the procedure. Right now, it has to be watched. There's a lot of change that has to go over in the way people spend money over there. We recognize that, and much of that changes with.
So people over there will still be using their credit cards and still be --
Well, how do you know that other personal spending not going on?
I think the one thing people have been extremely cautious of over the there is the use of any credit or personal expenditures. It's being monitored very 00092 carefully.
But we can spend $16 million on the IT system, and nobody knows how it gets spent.
If people wish to conceal things, it can be concealed for a while, but then they get caught.
A series of things. There seems to be agreement on the part of both candidates that the senior-citizen discount will be preserved. Upon what does anybody base that prediction?
Well, that's a decision of the owners, and the Mayor is -- represents one of the strongest voices of ownership, as does Council.
(Inaudible, off mike.) Suppose there were a sale. Would the senior citizens' rate be preserved?
I'm sure it could be. 00093 I'm not sure it would be purchased with that as a permanent part of the structure of the company. I can't speak for a future owner but I know it's expensive, and I know if there were a sale, that would be something that they would look at as something they eventually would probably like to get rid of. It's one of the reasons we don't think a sale is a serious option, that the owners want the discount at least at some level.
Is there any other circumstance -- is there any other option other than a sale that could cause that to happen? Say the Public Utility Commission opted to --
I have been told by lawyers that there is a possible argument that a senior-citizen discount can be perceived as discriminatory against other people in the class, and I have been told that that senior-citizen discount would not be successfully challenged in front of the PUC. So I've heard arguments both ways.
But that would be the difference between making a sale attractive to a buyer and not making it. 00094
No, it's one of the many things that I think make the notion that PGW could be sold impractical. The largest -- I think the two largest -- three largest things that make the sale of PGW not probable is, A, because we do not have equity investment, we don't sell stock, all of our capital costs come through the sale of debt. Therefore, we have very high debt. If we sold the company and you then had to pay the debt from the proceeds, there would be very little left. Presumably the City would want the $18 million a year that PGW provides them. That would probably not happen. The buyer would most likely be a for-profit company. Therefore, the $900 million in tax-exempt debt would have to be converted to taxable debt. That's like with the 54-55 million premium on top of that. Finally, if the company were sold, I believe that, much as we see with PECO and the Chicago company it's merging with, there would be an effort to reduce the workforce. And I have no 23 reason to believe that the owners of the company, as embodied by Council and the Mayor, are terribly interested in seeing large numbers of layoffs that 00095 would be generated by a sale. I just don't think it's an option.
That's reassuring, as the Public Utility Commission does not take the bull by the horn and decide that it is, A, it is legal, that the law passes muster. And if that happens, the Public Utility Commission may be emboldened. They could care less about Philadelphia, don't they?
Well, aren't they used to making evaluations of the financial worth of the company?
And of its solidness as far as being a going concern? And wouldn't it be natural for them to view, from their prism of past experience, the concept that people ought not to -- maybe they ought to get little special consideration, but they ought not to get anything that would really help them?
Well, I can't project what they're going to do in that regard, 00096 Councilman.
Thank you. Do we have any more questions? (No further questions.)
All right. We have others who are here to testify with regard to this bill. Is there anyone from PGW's side? (No response.)
All right. I believe that we have Reverend Shine from the Black Clergy of Philadelphia and vicinity who is here, and certainly, we welcome him. (Reverend Shine comes forward.)
We're very happy to have you. Would you formally identify yourself for the record, Reverend. Thank you for coming.
Yes, Madam Chairman. Madam Chair and Councilwoman Tasco, Councilman Cohen, I have two regrets as I, Reverend Robert Shine, Chairman of the Civic and Social Committee 00097 of Black Clergy of Philadelphia and vicinity, and I come before this chamber with these two regrets: The first being that I have no 5 particular document to submit to the Chairlady; and secondly, that this chamber is not filled, not filled with citizens of our city to express their outrage over the recent information that we have received, first being brought to the public's attention through the news media. I am before you, Madam Chairperson, to express the outrage of a number of our citizens regarding the news that we received of the pending discharge of Mr. Gregory Martin from the position of Vice President and employment at the Philadelphia Gas Works. It is in the opinion of the clergy of this city, of whom I sit to represent this afternoon and for which I give thanks to you for permitting me to make this public pronouncement of outrage.
When we learned of Mr. Gregory Martin's pending discharge from the Gas Works, we looked at the history of those of African-American descent -- Mr. Jim Hawes, Mr. 00098 Gregory Martin, Miss Connie Bradford -- and we began to see a systemic nature pattern that had been in place, and we want to voice our opposition to what is now about to occur. We unanimously adopted a resolution at the clergy meeting to wholeheartedly support the retention of Mr. Martin as well as Miss Connie Bradford. It is in our good judgment and the reputation of the clergy that we believe we enjoy in this city to disclaim that the position taken by Mr. Ben Hayllar that Mr. Martin is soley responsible for the cost overruns, as has been alleged, thus resulting in his pending dismissal. We believe that he could not singularly have been responsible, given the knowledge that we have. That is, that a subordinate to Mr. Martin was given oversight of a project. That I am sure and am convinced, having been in the corporate community for 29 years, that as a subordinate to a senior vice president, that he was given -- this subordinate was given complete oversight of the project but not reporting -- didn't directly report to the vice president, Mr. Martin, but was to directly report to the CEO and President, once 00099 again, Mr. Ben Hayllar. If, then, Mr. Martin was singularly responsible and, therefore, singled out as the one that must be dismissed, then all who were on this project that called for the overruns should equally receive the same equal treatment. If justice and fairness and equality is to be administered in the positive sense, then it must also be distributed in the negative sense. We do not believe that PGW, and through its COO, Mr. Martin, that on this project, he be -- Mr. Martin be taken off or out of the loop of bringing in this particular project, that his responsibility, as one who has come to our city and has provided for us what we believe to be unimpeachable management. And that, certainly, there is always in every case some human misjudgment but that goes as far as any CEO as well. All of us are not perfect. But with what relationship our community has enjoyed with the management skills that were provided through PGW through Mr. Martin, we believe that this is an unacceptable, untenable action that was taken. And, therefore, it is our 00100 opinion to request of this body that any legislative bills or actions be held until such time as a more appropriate fact-finding can be held to ascertain for the public good; for PGW does, in fact, serve us and serve us well, but there are problems even there. And unless we're going to multiply the problems, then we believe that we should, first of all, in good judgment and good common sense, review the actions thus far taken that have allowed for these cost overruns. And, once again, Madam Chairman, I do not believe -- and I believe it is the unanimous opinion of the clergy -- that Mr. Martin could not, by any stretch of the imagination, be solely responsible for those cost overruns. The grounds for Mr. Martin's dismissal, which we believe is to take place in two weeks, we believe that they are unfounded grounds if it includes such a meager item as a security system at his residence. I indicated moments ago that having been in the corporate community for more than 29 years and having dealt with labor all that while, I understand well the potential that when you go through labor negotiations with management, 00101 oftentimes, it does occur that there is some indication of threats on the homes of management. Thus, security for their home and their family. Anyone would want to secure that. And, therefore, we believe that if his system was not appropriate for his comfort and his family's security, then I believe any man would take whatever action appropriate to provide for that and should not be held in harm's way for having done so.
That raises the question of the cost for the provision of that security system that was in question. How did that impact or impede upon the project, and how was that project then to be brought in? Again, referencing my own experience in corporate community, it is always anticipated that there will be cost overruns. There is the design community, there is the management, the project leader. And if the minds never get together, and I as a designer leave my design plan for the management to figure out the budget and then I leave it to someone else to vote on it without the consideration of all the other components to bring this project in on time, the vendor's 00102 consideration, the training of the personnel to operate a new system, the testings of the new systems going beyond the time constraint for going on line with the new system, all these are continued mounting expenses. Then there's the debugging of the new system and bringing over the data from the old system to the new system, which always has in itself some problems of conversion. And so I think that when we would separate and distinguish between the management ability and skills provided by Mr. Martin and the fact that there has been apparently been some mismanagement, it cannot be laid at the feet solely of Mr. Martin. And, once again, Madam Chair, Madam Tasco, and Councilperson Cohen, our unanimous conclusion, therefore, is that any legislation or any appeal for legislation from the management of Philadelphia Gas Works be delayed until such time as this matter is satisfactorily concluded with respect to Mr. Martin and Miss Connie Bradford. And I might add a third person -- Miss Lynn Fields. We would like to be observers of what 00103 action is to be taken. When I failed as Chairman of the Civic Committee and I owe to our organization and the peoples of our city and congregations, I owe to them an apology for my failure as chairman of this committee, and they have given to me that responsibility, when I did not first raise the concern at the dismissal of Mr. Jim Hawes. And let me say a point there, if I may. In my conclusion, once again, in the corporate community, the legal position that we have, and that is, when one is discharged, it is with the understanding, the clear understanding, that no letter would follow him to any potential place of employment that he or she may be seeking. Tantamount to that, perhaps no letter was, but when the news media in effect has the same effect, thus it would bode against anyone gaining gainful employment. Therefore, how so ever the media learned whatever was leaked to the media, whatever was given to the media, how ever the media learned through their own means, this had the effect, I then believe that it is a responsible agent acting responsibly to have put 00104 on notice to news media for the action that would misrepresent their position. Therefore, once again, I appeal to this body, this hearing committee, that you would give consideration that we might become more closely involved in observing what has happened, and then I would like the privilege to return to this chamber before another scheduled hearing and to provide an update of information that will come to our hands. Thank you, Madam Chair, for this opportunity.
Thank you very much, Reverend Shine. Are there any questions? (No questions.)
Thank you so much. We now have testimony from the Gas Workers' Union. We thank you for your comments and we will be making our own. Thank you. (Joe Given comes forward.)
Welcome. Please identify yourself for the record and make 00105 your testimony. Thank you, glad to have you.
Good afternoon. My name's Joe Given. I'm President of the Gas Works Employees Union. And I wasn't going to testify here today, I wasn't going to get involved with this politics but for Mr. Reverend Shine to imply that some of our union people threatened Mr. Martin is totally outrageous. He talks about being outrageous and responsible. I think that's an irresponsible remark from Mr. Reverend Shine to even mention that our members would threaten Mr. Martin. And as far as Mr. Hawes, my understanding is that he resigned. And as far as Miss Connie Bradford, she deals with two African-American union reps in her department, who are constantly saying that she was incompetent in that job. And I think it's totally irresponsible for him to imply that our union members would even think about threatening the CEO of PGW. Thank you.
Thank you, Mr. 00106 Given. Are there any other individuals here who would like to testify? (No response.)
All right. I think this will end or public hearing, and we will now go into our stated meeting. In fact, let me retract that. We also do not have a quorum so we will leave it in the public hearing phase, but let the Chair make these statements: Number one, we do not know -- this committee has no idea, nor obviously does PGW, about the cost overruns to the City to the tune of $16 million, nor have we received any information about how to correct it. Before we resume this hearing, we want information, specific information, on what PGW plans to do in that regard. Number two, a new audit plan was referred to by the Vice Chair of this committee. That was to be instituted in 1998. We have no 24 information with regard to that, and we want information before we will even continue 00107 continuing this hearing in that regard. And, number three, we are now dealing with the budget for the Year 2000. However, we have no information with regard to cost overruns even for 1999, and this committee does not intend to continue some of these unknown and, in my opinion, irresponsible acts to the taxpayers of this city with regard to information that we get. Let me say that many years ago, when former Congressman Lucien Blackwell was Chair of the Commission and they came before him for a rate increase, not only did he not allow it, but he insisted that the management folks at PGW take a 5 percent decrease. So we understand that in spite of all of these issues, that there are certain latitudes that everyone in their respective positions has. Now, we believe -- in fact, I neglected to ask Reverend Shine if he requested a meeting with PGW, and I suspect that he has and that it was not granted until after PGW chose to make certain actions. Let me say this: that we are here for the public good. We do not intend on any group of people, any race of people, any 00108 ratepayers to be disrespected, overlooked, or ignored under our watch. We expect that before again that this committee hearing resumes, that we have answers to those three issues, that we have some specific detail about costs in general, about how PGW deals with taxpayers' money, about how you deal with this audit process, who is involved, and what the levels of responsibility are. All of this, this committee expects to receive so that we can pass it out to members of the committee and other members of Council. With that, are there any other comments?
Thank you, Madam Chairwoman. I would just like to say that with regard to -- I may be mistaken in this comment, but I thought I heard that the information relative to the cost overrun was passed on to the District Attorney. If that is true, I'd like to know, on what basis was it passed? Was there an internal investigation to establish that there was some criminal activity associated with the cost 00109 overrun? And if there was not, I think we need to know why it was passed on to the District Attorney's Office to investigate prior to PGW doing any internal investigation to establish the responsibility for the cost overrun, and that runs to the responsibility of the PFMC Board.
So those are five issues that we've mentioned, to which we expect specific written documentation before this hearing will resume. And with that, Councilman Cohen?
Just one question. Following up Councilwoman Tasco, could we get an answer to your question now?
Mr. Hayllar, we would ask you to come back to the witness stand. (Mr. Hayllar returns to witness table.)
Councilman Cohen is asking an answer to the last question 00110 raised by Vice Chair Marian Tasco with regard to cost overruns being referred to the DA and why.
A legal question deserves a legal answer. (Abby Pozefsky comes forward.)
Madam Chair, I'm Abby Pozefsky, General Counsel for the Gas Works. We've been involved in an investigation with the District Attorney's Office for approximately the last year, and we have cooperated with the District Attorney in every request that the District Attorney has made. She asked for us to provide to her materials in which the cost overrun was described. Those were materials that had been presented to the Board at one of the executive sessions of the Board meeting. And as is our practice when the District Attorney has asked us for materials, we have passed them on to her, and we did so.
Could you tell us, how did the District Attorney know about the IT cost overrun? How would she know about that if that's an internal matter and as relative to the budget? How was she notified about it? How did 00111 she know about it? He would she even know to ask about a cost overrun? Who told her?
I'm not sure. The District Attorney, at this point, has interviewed and has had before the grand jury many of our Board members and many of our employees. In terms of how she actually learned about this particular cost overrun, I'm sorry, I just don't know the answer to that.
Mr. Hayllar said we should go legally, and we're doing that. Now, if you're the top person, then somebody's got to know.
We really don't -- I really don't know how the District Attorney -- I don't know how she got the --
When did she ask for the information on the cost overrun?
It was not a specific request for information respecting the cost overrun; it was a request for information respecting a Board meeting on October the 19th. 00112 And in the information that was provided to the Board for that meeting, there was information respecting the cost overrun. There was not a specific request for that.
So prior to October 19th, you mean the Board had no knowledge of the cost overrun? And this has been going on a long time with the IT system. There was no 21 information given to the Board, they had no idea what was going on with the IT system until October 19th?
What the Board knew prior to October 19th and what the authorizations 00113 consisted of were these. There was an initial authorization for the contract for $9.75 million, and that was in 1997 that that occurred. At that time, the contract request was reviewed by the Board and it was approved. The Board had a policy in effect at that time, which was changed last year, that if a contract was more than a million dollars, it needed to be approved by the Board. Last year, it was reduced to $500,000. In every month, in every Board book, there is -- any contract that is exceeding the amount of a $500,000 contract or a $500,000 overrun is supposed to be presented to the Board. The last that the Board saw with respect to the authorization on the SPL contract, which is the primary BCCS contract, was the authorization that the Board gave in 1997 for the $9.75 million.
Well, the Board submits to us a budget each year and it's supposed to be done as of last year. And any correspondence or requests coming to the Commission comes with a resolution. Does that mean they sent us a resolution with a budget that 00114 they hadn't reviewed? Wouldn't they have seen the cost overrun in the budget?
They certainly approved the resolution and they certainly saw the Capital Budget. The Capital Budget doesn't have a reference point back to individual contracts or individual projects with what was initially authorized and what is then subsequently authorized. In other words, there's no reference point, there's nothing that says $9.75 million, authorized $18 million and counting spent. So although the Capital Budget was approved, it was not approved with reference back to what the original categories of authorized spending were. And, again, the Board's assumption is that on individual contracts, they have demanded approval of anything over $500,000. And their assumption is that if there is an overrun, it's the responsibility of the CEO or the COO to come back to the Board with that information for an additional Board authorization.
Mr. Hayllar, since you were the acting CEO, why were we not informed and why was not the Board informed?
The Board was informed as soon as the information was compiled. As I told you, the corporate counsel and myself and others were trying to get the information. It was not made readily available. When it was finally compiled --
Okay. So they couldn't give you -- how long did it take you to get the information? Sounds like us, right, when we ask you for information and can't get it?
Well, I'm back to the original question that the Councilwoman asked, which was, how did the DA know to investigate anything? I'm still waiting for that answer.
The DA's investigation started on September 30, 1998. It was generated by stories that appeared in the Daily News. It has been pervasive. They have been in residence in the building almost continually. They have had tens of thousands of documents subpoenaed and sent over to them. They have interviewed before the grand jury scores of our people, including the Board members.
Madam Chair, if I may, if I may. Apparently there is a simpler explanation, and I'm reminded of it. 00117 On October the 22nd, Mr. Martin was placed on administrative leave, and that was announced in the newspaper. It was at that point, the District Attorney asked us to provide materials that had been provided to the Board on which the administrative leave was prefaced. So that's how the District Attorney -- that's -- apparently, the timing of it would suggest that that's how she learned about it.
I thought you said that it was given to her October 19th.
The first Board meeting was October 19th, the continuation of the Board meeting was October 21st. The materials were provided after the administrative leave on October the 22nd, I believe.
No, I'm sorry. That was the Board meeting. The Board materials of October 19th, they were provided to her subsequent to that date.
So she called you after she read in the paper that he was leaving. 00118
I'm not sure whether it was a call or not. David Gressing (ph.) in our office is the one who handles those matters.
Well, why would she ask you about cost overruns? Did she think it was a criminal matter, a criminal issue?
No, we have not. It's not within our purview to determine whether it's criminal.
Do you plan to have an investigation as to why the cost overrun exists and who was responsible prior to the dismissal of Mr. Martin? Was there an internal investigation to establish that he was soley responsible for it?
What is your process by which you, Mr. Hayllar, and the Board dismissed Mr. Martin? Was there an internal investigation? 00119
Was there a detailed internal investigation as to who was responsible for the cost overrun? See, we have a CEO, who is a former Finance Director of the City, who was a member of the Board, who knows absolutely nothing about what's going on over at PGW. Thank you. I'm finished.
You can't answer that question, Mr. Hayllar, either?
She wants to know why the District Attorney found out about this?
I think we've answered that question. We have had countless records subpoenaed and sent over to the District Attorney's Office. She has had before the grand jury scores of our people, including -- 00120
The question I'm asking is, was there an internal investigation to establish responsibility for the cost overrun for the IT system? And on what basis was Mr. Martin given to the Board for dismissal? That's the question I want to have answered.
There was a series of memos that were prepared and that were given to the Board, and on October the 19th, there was the Board booklet that indicated that --
What was the process for termination of Mr. Martin? Was there an internal investigation to establish that he was solely responsible for the cost overrun of the system? What was the determination on why he was let go?
Because he had the company pay for improvements to his own private 00121 residence, and that's wrong.
What was the internal investigation to prove that? Was there a hearing, was there a process by which that was established? Did he have an opportunity to answer and to defend himself before the Board?
The process on this, Councilwoman, was that on October the 19th, the Board had a meeting in which the initial materials were reviewed. And on --
Did Mr. Martin have an opportunity to go before the Board --
Yes, he did. On October the 21st, the Board met again to review the materials and to speak with Mr. Martin. Mr. Martin did have an opportunity to defend himself. I was not present at that meeting but my understanding is that he spoke with the Board for an extensive period of time. The Board met that day between 2 in the afternoon and quarter till 8 at night. So my understanding is that he 00122 had an opportunity at that point to speak directly with the Board members.
Was he informed as to the intent of this meeting and what the allegations were, what the charges were? Again, we go back to process.
I don't think so. Mr. Hayllar, you said you have been around since 1994? And we are -- we have to question? My goodness, we've been talking process for the last 15 minutes, and you have no 16 information that you can give us specifically as to how any of this happens, with all of these people who are announced that they have been let go or somehow forced out, and this public record can't indicate anything with regard to process and what PGW does and how and why?
If people wish to conceal things, they will conceal them until they're discovered, and they were discovered.
But I'm 00123 talking about you with your record with regard to PGW since 1994. You've been involved with PGW, by your own admission today, since 1994. How could we ask all these questions and you have not have answers and just continue to accuse people and take the ratepayers' money?
If this were a private company, maybe we could have a different discussion, but we have a public responsibility here, and that is why we're taking it so seriously. And we still get no answers. And you think that we're going to pass a budget of this size with no answers? That we are not responsible to the people of this city? I don't think so. We have absolutely no intentions of passing a budget without think answers, without information that makes since so that we can justify what we do. We will not take dollars from unemployed people, from poor, ill seniors and others in this city who are having a hard time making ends meet when we can't justify why we're doing it. We won't do it, sir, will not do it. 00124 Councilman Cohen?
I was struck during the newspaper articles that many people, or a number of people seem to state that what Mr. Hawes and Mr. Martin specifically did -- well, it was Mr. Hawes, I don't know whether it was Mr. Martin at the time -- whether they specifically followed industry practices. Do you remember that?
Did you ever find out whether it was the industry practice?
Well, they had come from the private sector, hadn't they?
I don't think that in the private sector, that some of the things that they did would be tolerated under circumstances. They're perhaps more tolerant than we are, but this is a publicly-owned utility and 00125 the highest standards have to be applied, and they weren't done. And I don't think the --
And I don't think industry standard permits free work being done on personal residences.
Free work, having the company pay for improvements to a private residence. I just don't think that's tolerated anywhere.
Well, do you know? I mean, you say you think it's not done, but you've been in the public sector for a long time, where everything is scrutinized.
Yeah. I don't -- I can't think of any -- and Gregory Driscoll has stated in, I think, the same article that you read that he had never heard of such a thing. And to say that it's somehow an industry practice, I think, is a serious mistake. And it should not be tolerated.
The quote was that it was not, and I don't believe anyone would countenance doing that. And if it were industry practice in the private sector -- and, obviously, it's not the norm in the public sector and it's not something we should countenance. We should not be allowing ratepayers to pay for improvements to a private residence.
Well, I just find it an area of doubt where there is industry practice, and then we, from the public sector, say we've got to get private-industry people who have experience and know how to operate things better than government people, 'cause that's what the saying is most of the time, and then you have them follow the industry practice and then condemn them for it. I mean, maybe it's not a wise policy and maybe it ought not to be followed, but if it is followed --
Again, we have no reason to believe that a private sector would tolerate the kind of behavior that we had seen in numerous instances from some of those people. It's just not done in any ethical society. 00127
Thank you very much. Are there any other questions? (No further questions.)
Then this hearing will be recessed subject to the call of the Chair. Excuse me, before we do, yes, Reverend Shine? (Reverend Shine returns to witness table.).
Just identify yourself again for the record, if you would, Reverend Shine.
Thank you for this renewed privilege. I'm Reverend Robert Shine, Vice President of the Black Clergy, also serving as the Chairman of the Civic and Social Committee of Black Clergy. Madam Chairman, for the record's sake, it was not my intent at this table to imply that the union could possibly have threatened the home 00128 or the family of the persons now in question. I cited what has happened in previous experiences where I personally was involved from the corporate community. I think it was a unwise remark that was made before this Council to suggest that I had any knowledge that this union would be threatening the home of Mr. Martin or any other person -- leading me to another point that I'd like to make. At the senior vice presidency level, all of us are much aware that there is an authorization, a budget authorization, that requires his signature and his signature alone. If, in fact, I was the senior vice president of an organization, my responsibility may include having a million-dollar budget, but I could sign up to a million dollars because of my position in the company. It is not unusual, Madam Chairman, it is not unusual for there to be some maintenance of security. As a matter of fact, it is consistent with if you employed me and I came to you from another state and part of my package in coming here was that the company that I'm going to be employed with would provide me residence or assist 00129 me in relocating, and I said that included in that relocation would be these factors that I would want to be considered, and if it, in fact, those factors were agreed upon and they were of the nature that my family and I were comfortable with, then that would be part of my agreement to come, my contract. If I were not satisfied and I decided to make some changes or improve and modify those conditions, certainly, it is within the realm and the scope of what my role is because of understanding my leadership. In the case of Mr. Martin, Mr. Martin came to Philadelphia, as I understand it, because he was asked to come. He never sought this position but was asked to come. I believe that if we understood what the contractual arrangement was and that it included certain perks, some benefits that he would be entitled to as a vice president, then of course, if there was some modifications -- not that they were going to renovate his home -- I believe the issue is a security system -- what is the cost of a security system. I further want to make this 00130 observation, and that is that if this is a criminal action and if this criminal action was started because of something read in the newspaper, how many people would I be asking the District Attorney to bring action against? If this information was forwarded over on the grounds of suspicion and, therefore, wanted to bring in the District Attorney's Office and the District Attorney decided to take some action, it is not based on some hypothetical or some just intuition. It's based on something that was placed in that person's hands, the District Attorney's hands. The District Attorney does not have that role, I believe. I don't believe that it was in the jurisdiction of the policy of her office, unless she is asked to come into it. And then perhaps by protocol -- protocol being that upon a written request from either the Council, upon a written request from the Mayor's Office, perhaps from the Solicitor or from some other office, a request that there be an investigation in this matter, if this was an internal problem, as I have aforestated, whereby mismanagement did not begin 00131 nor conclude with Mr. Martin, there are other extenuating reasons about this. And I would beg this body -- this hearing to give consideration to the voice of the people of this city. I speak for the clergy, of course, but the people of this city deserve. No 8 longer should we be tolerant but intolerant of those actions at will because there's the feelings of those that would take these courses of action.
We must have prudence and wisdom and we must have justice and fairness for all. And until and unless that's done, then, Madam Chair, I'm asking you respectfully if you would withhold any action on this legislation. Thank you once again.
Reverend Shine, may I ask you a question. Did you request a meeting on behalf of yourself and the Black Clergy of Philadelphia and the city, the most respected religious group, one of them in our city, did you request a meeting with Mr. Hayllar?
The secretary, when I phoned the office, it became the bureaucratic way, and I asked her if I would please be privileged to speak with Mr. Hayllar. I finally prevailed, but I understood the consternation from the voice that was used by the secretary, or whomever it was that answered the phone -- presumably his secretary. Mr. Hayllar returned my call. Then he offered a date of Wednesday, at 9 a.m., in which we could have such a meeting. The clergy meets Monday and Tuesday. The Philadelphia conference meets. I took that knowledge, and I tried unsuccessfully on Friday evening to reestablish a point of contact with Mr. Hayllar. Being unsuccessful, the issue was brought to the clergy conference. They unanimously did not agree that the Wednesday date was satisfactory, inasmuch as we had been informed that there would be some action taken against Mr. Martin on Tuesday, today. 00133 We, therefore, urgently wrote him a letter and sent it by Express Mail in the hope that he would receive our plea to meet with us prior to a meeting today for some course of action. So, in fact, yes, to answer your question. I was giving the scenario of how things did occur. And I phoned again to -- Mr. Hayllar returned the call in my absence as I am involved in the Public Education and Communities of Faith Conference. And so in an attempt to reach him again, then the decision of the clergy, the unanimous decision, was that in the event that you are unsuccessful in reaching Mr. Hayllar, then we should take another course of action, which we attempted to do.
Thank you again, Reverend Shine. Mr. Hayllar, would you again come back to the witness stand? (Mr. Hayllar returns to witness table). 00134
May I assume then that you know of this organization, know of their work in this city and that they wanted to meet with you?
Yes. And I have an appointment with them at o'clock tomorrow. 8
Well, then may 9 I ask you, why was there a meeting this morning given the fact that we had this hearing at 10? Why was there a meeting this morning? The rumors were flying all around yesterday. So why, then, was not time granted for this meeting? And why was there a meeting this morning to make a decision to send Mr. Martin a letter firing him before this complete hearing even started?
The Board set the time of their meeting, and I'm not a member of the Board.
Please, Mr. Hayllar, please, please. At least we can act in good faith here.
Please. We all heard it yesterday, we all heard it yesterday. And even when the Black Clergy asked to meet, that they were given a Wednesday date so you could try to do that today, which you also tried to do even before our hearings started so that if we dealt with the issue, it would be moot. Please, let's not insult one another's intelligence. It's absolutely unconscionable when we are acting in the public faith. This is not your company or for you folks over there. This belongs to the public trust. It is so top-heavy and has been traditionally, and yet we continue to have problems and continue to have no answers. So we now have six issues on the table. And one of them is the whole issue specifically of Mr. Martin, the disrespect shown members of our Philadelphia community. And we are asking that this whole issue be reviewed so that we understand just what is going on and feel that everybody paid with public dollars, as was Mr. Martin, that the entire issue is one where the 00136 public is satisfied that right has been done. And so we are asking that until this issue is cleared up, that no definite decision be made without inclusion and full airing before this committee in that regard. That's form him as employee and whatever other people are involved in all of this whole decision. That is the Chair's recommendation. Are there any other questions from members of the committee? (No further questions.)
Is there anyone else here who would like to testify? (No response.)
All right. Then this hearing is adjourned subject to the -- recessed subject to the call of the Chair. (Adjourned at 1:00 p.m.) - - - 00137 C E R T I F I C A T E I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Tuesday, November 9, 1999, were reported fully and accurately by me, and that this is a correct transcript of same. RE: COUNCIL COMMITTEE ON FINANCE BILL NO. 990712 __________________________________, JOSEPHINE CARDILLO, Registered Professional Reporter