Leader Blues

Wednesday, April 11, 2007

TOP STORY >>FBI investigates former Cabot mayor

Leader staff writer

The Federal Bureau of Investigation is looking into the administration of former Cabot Mayor Stubby Stumbaugh for possible contract irregularities.

Although Steve Frazier, the special agent in the Little Rock FBI bureau who deals with the media, would neither confirm nor deny the investigation, reliable sources say the agency took possession of the former mayor’s computer and the computer used by former Public Works Director Jim Towe as well as the 2003 and 2004 general fund bank statements and the 2003 bank statements for the water department.

Both computers and the general fund bank statements have been returned, sources say. The water and wastewater statements have not been returned. The investigation is said to include an Arkansas engineering firm that was once affiliated with an Alabama-based firm whose top officials have been convicted of bribery and other charges.

Contacted Tuesday, Stumbaugh, who now works for the garbage company reportedly included in the investigation, said he had no knowledge of the probe and insisted that if the FBI did not acknowledge the investigation, it did not exist. Stumbaugh maintains that he spent his four years in office doing the best he could for Cabot.

“Every dime I spent was authorized by the city council and the budgetary process,” he said. Frazier, while not acknowledging an investigation, said the bureau doesn’t talk about ongoing investigations in part because of the risk of unnecessarily tarnishing the reputations of those who have done nothing illegal.

Stumbaugh’s four-year term in office that ended in 2006 was tumultuous. He was often at odds with the council. Former Alderman Odis Waymack especially questioned his spending practices and openly accused him of illegally funneling money from the water department to pay expenses in other departments.

Waymack also believed that Stumbaugh allowed a portable toilet company to illegally dump chemical-laden wastes at the sewer treatment plant that had the potential to hinder the treatment process. Former Alderman James Glenn, who is off the council now after more than 20 years because he ran for mayor instead, said he learned about the FBI investigation “through the grapevine about two months ago.”

Glenn said in the four years he served with Stumbaugh, he was uncomfortable at times with the way the former mayor ran his office, but never more than in July 2006, when it was time to award a contract for garbage and trash collection.

The contract was awarded to IESI, which held the existing contract, over the objections of several council members, who said the bidding was unfair.

Jerry Lester with L&L Services, which had the contract before IESI, complained to the council in July that the contract was bid twice and IESI didn’t bid the first time.

Stumbaugh told Lester the first bids were thrown out because they were all too high. IESI didn’t bid the first time because the company didn’t receive the notice it needed to, he said.

But Lester said IESI had an advantage over the others because it got to see what the other companies bid and could bid lower to win the contract.

“I feel like I’ve been dealt a bad hand,” Lester told the mayor and council. IESI’s successful bid raised garbage and trash rates in Cabot from $11.70 to $16.45.

Lester’s first bid was $18.45 but his second was $17.90, just $1.45 more than IESI’s. Stumbaugh pointed out as evidence that he was correct in throwing out all bids to try to get the cost down for city residents.

Glenn said he was unaware the first bids had been thrown out until the second bids were in and it was time for the council to award the contract.

“I was really concerned about the bidding,” Glenn said this week. “I think the FBI should follow through to see if there is anything there. I just didn’t think it was right to re-bid it.”

Cabot Mayor Eddie Joe Williams, who served on the council before Stumbaugh was elected, said Tuesday that he was not comfortable talking about the investigation. “I’d really rather not comment,” Williams said.

The investigation also likely includes the city’s contracts for water and sewer projects with USI-Arkansas, an engineering firm that started in 2001 as a satellite of USI, the Alabama-based engineering firm that was investigated by the FBI for more than four years before two high-ranking officials, President Sohan P. Singh and vice president Edward T. Key, were convicted in federal court late in 2006 on bribery and other charges.

In mid-February, a Jefferson County, Ala., commissioner in charge of county environmental services pleaded guilty to taking bribes totaling $140,000 from agents of USI, which received more than $50 million in engineering contracts for a sewer plant there.

USI-Arkansas President Charles Nickle said Tuesday that he was unaware of the FBI investigation. Nickle said his firm broke away from the one in Alabama in 2002, just a year after it opened.

All he knows about the troubles of the parent company is what he reads in the newspaper, he said.

The Cabot Water and Waste-water Commission took over the city’s utilities after the contract to improve the city’s water systems was awarded to USI-Arkansas, but in 2005, the commission gave that firm the contract for the $16 million sewer plant that is currently under construction and is expected to be completed on time.

Bill Cypert, Cabot Water and Wastewater Commission secretary, said this week that as director of public works, Towe sought the requests for qualifications that were submitted by the engineering firms competing for the project.

“I think the process was fair and equitable and I didn’t feel pressured,” Cypert said. “I remember thinking (USI-Arkansas) was the best for the job.”

He said Waymack first made him aware that the firm the commission had chosen was charging more than is customary.
Cypert also said he researched and found no connection between USI-Arkansas and the firm that would later be convicted of bribery.

But he did find that most engineering firms charge 8 or 10 percent of the total cost of a project, while USI-Arkansas charged Cabot 11 or 12 percent. Waymack said the fee was actually 12.81 percent.

“Never before had we paid that kind of price for engineering,” Waymack said. “They overcharged us.”

Nickle said the industry standard for engineering fees is 10-15 percent, depending upon the complexity of the job. The Cabot wastewater plant has many parts so the engineering fee is not out of line, he said.

Cypert said that while he believes Cabot is “paying a premium” for the services of USI-Arkansas, the firm is meeting the commission’s expectations.

Stumbaugh said Tuesday that he learned about USI-Arkansas’ past connection to USI and the FBI investigation into USI only after the city had signed contracts with USI-Arkansas.