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San Diego Daily Transcript
1/3/2002

Port deflects ethics questions about Commissioner Malcolm

By David Hicks
With Port Commissioner David Malcolm under fire for alleged conflicts of interest involving Duke Energy and the South Bay Power Plant, the new chairman of the Port has released a statement saying the issue should be resolved by a lawsuit already in the courts.
     Shortly after he was sworn in as the new chairman of the San Diego Unified Port District's Board of Commissioners on Wednesday, Stephen Cushman issued a statement saying the allegations against Malcolm would be aired during the trial of a suit filed in December 2000 by Lawrence Gorfine.
     The suit accuses Malcolm of failing to report all his financial interests on disclosure documents required by the state.
     "We await the determination and outcome of this pending litigation and are confident the judicial system will fully address and properly resolve these issues," Cushman said in the release.
     Critics have been quick to renew calls for Malcolm's resignation in light of recent revelations involving his business agreement with Duke Energy, which is the operator of the South Bay Power Plant. The Port owns the plant and leases it to Duke under an agreement Malcolm helped negotiate.
     Attorney Michael Aguirre said Malcolm betrayed the public trust when he agreed to accept $20,000 a month in consulting fees from Duke and promised to place the company's interests over those of the Port. Aguirre, who is running for district attorney, has been a harsh critic of Duke and other power generators that allegedly overcharged consumers during the recent energy crisis.
    Aguirre said the "forces of indifference" are prevailing at the Port, which should look more aggressively into Malcolm's business deals.
     "Is there reasonable suspicion that David Malcolm may have violated state and federal law? Absolutely," Aguirre said. "Is there a need for an investigation? Absolutely. Should the Port be involved? Absolutely."
     Malcolm, a former member of the Chula Vista City Council and the California Coastal Commission, is in the middle of his second term on the Port Commission. He represents Chula Vista.
     Chula Vista City Councilwoman Mary Salas said Malcolm should step down, although he apparently has no intention of leaving.
     "It's clear he was supposed to be working in the interests of Duke Energy over the Port and over the City of Chula Vista -- and he is our appointed representative," Salas said. "Just that fact makes me think Mr. Malcolm should resign."		     The Port District negotiated a 10-year lease with Duke in the late 1990s to operate the South Bay Power Plant, which is on Port land in Chula Vista. The company agreed to pay the Port $110 million over the life of the lease, which is the same amount the Port paid San Diego Gas & Electric Co. to buy the plant. Duke also agreed to seek a new location for the facility.
     Malcolm helped negotiate the lease. However, in 1999 he entered into a consulting contract with the company. He disclosed the deal to the Port's attorneys and abstained from future votes involving the plant.
     However, attorney Joel Wohlfeil -- who is handling the Golfine suit -- alleges that Malcolm did in fact participate in several discussions involving the plant and Duke after disclosing his business relationship.
     The suit addresses Malcolm's alleged failure to report financial contacts with various companies doing business with the Port, Wohlfeil said. The case is scheduled to go to trial Jan. 25, although it probably will be delayed, he said.
     On Jan. 4, a retired judge will rule on requests made by Malcolm's attorneys that certain documents involved in the case remain confidential, Wohlfeil said. Included in those documents are agreements between Public Benefit Power, a company formed by Malcolm, and Duke Energy, he said.
     Malcolm did not return phone calls Thursday. His attorney, Ben Davidian, said there is no genuine connection between the lawsuit and Duke Energy.
     "It's totally irrelevant to the case we're involved in, (which alleges) that Commissioner Malcolm failed to properly report everything he needed to report on his statements of economic interest," Davidian said. "The trial will determine that he did indeed report everything -- in fact, he overreported."
     "This (mention of the Duke issue) is a political red herring and it has nothing to do with the case we're going to try," he said.


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