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Detroiters Organize to File Federal Lawsuit, Conflicts of Interest Still In Question

Several groups across the state have joined Detroiters in challenging the new emergency financial manager (EFM) law in federal court.

Detroit, MI — Several groups across the state have joined Detroiters in challenging the new emergency financial manager (EFM) law in federal court. Support mounted after the March 14 appointment of bankruptcy attorney Kevyn Orr as EFM of Detroit.

“We’re looking at legal challenges in federal court and we expect that the Sugar Law Center or other groups will be filing such a challenge,” Attorney John Philo of the Sugar Law Center told the Michigan Citizen. Philo would not say when the claim would be filed.

On March 18, during a press conference at Bethel Baptist Church East, the Council of Black Pastors announced it was joining the group of unions, including AFSCME Council 25 and the UAW, Detroit Branch NAACP and others.

Rev. Michael Owens, president of the Council, called the appointment “undemocratic.”

“We can’t afford to have Detroit be a success story for those hell-bent on our disenfranchisement through a disregard of home rule and the abolishment of voting rights,” Owens said.

Meanwhile, activists continue to conduct what they call the “slowdown in Motown,” a traffic blockage on I-95, the Lodge expressway and I-75. Lining up three abreast to cover each lane of the highway, with flashers going, the protestors travel at 5-15 miles an hour “stopping commerce” in Detroit, according to Rev. David Bullock, chair of Detroit Chapter Operation PUSH and the Rev. Charles Williams, Detroit chapter National Action Network.

In a two-page press statement titled “Democracy Under Siege!”, issued the day following the announcement of Jones Day Law Firm partner Kevyn Orr as Detroit’s EFM, Detroit Branch NAACP President Wendell Anthony wrote: “Mr. Kevyn Orr has credentials that any mother or father would be most proud to claim for their own. It is not the man, it is the plan and the process by which he has arrived in town. Lest we forget, 2.3 million Michiganders, by a margin of 52 percent, voted to repeal Public Act 4!”

Anthony equated the law to a modern-day poll tax.

“Our right to elect public officials to represent our community should not be traded on the bargaining table of economic distress. For many, this is a new poll tax,” Anthony wrote. “One can simply make the argument that based upon your inability to pay your bills, you should, in fact, lose your right to engage in the electoral privileges of our nation.”

Conflicts of interest

Anthony also pointed out the conflicts of interest of Orr and Jones Day in representing the city.

Mayor Dave Bing, who welcomed the appointment of an EFM, announced two days before Orr’s appointment that the city had contracted with Jones Day to assist in the restructuring of the city’s financing.

“Mr. Orr represents Wells Fargo — one of the nation’s largest banks engaged in foreclosures in the United States. At least 7,800 foreclosures are occurring right now on Wayne County’s new list,” Anthony wrote. “Mr. Orr represents the Amway Corporation, in which Richard DeVos, a founder, was a lead voice in implementing the right-to-work effort which is now law in the state of Michigan.

Amway was also one of Gov. Snyder’s biggest campaign contributors (see Michigan Citizen March 17 issue, “Conflicts of interest in ‘restructuring’ choices”).

Bank of America, JPMorgan Chase, Deutsch Banke AG, The Goldman Sachs Group, L.P., Wells Fargo, Lehman Brothers and LIBOR (London Interbank Offered Rate) are among large financial institutions that are Jones Day clients.

JPMorgan Chase, Bank of America and LIBOR are also a few of the institutions to which the city is indebted.

During the press conference announcing Orr’s appointment, this reporter queried Orr regarding the potential conflict.

Orr responded that he planned to resign from the firm effective the next day to “rid of any impropriety.”

Orr’s resignation has yet to be confirmed by the Michigan Citizen. Calls and e-mails to the governor’s office to interview Orr have gone unanswered. Jones Day did not respond by press time.

Even if Orr resigns, it is unclear whether the conflict will have been eliminated. If he has a retirement plan with the firm — i.e., pension , 401K, share of profits or other benefits — then he continues to have a vested interest in the financial well-being of the firm.

Although Philo could not offer a legal opinion on the potential conflict of interest, he says it raises very serious questions.

“There’s the appearance of conflict,” Philo said. “The appointment raises a lot of questions with Jones Day representing Bank of America on the other side of credit swaps of the city.”

Calls to the American Bar Association and legal experts to confirm the continued conflict were not returned by press time.

Early start date raises questions

PA 436 goes into effect March 28, three days after Orr’s first day at work. The March 25 start day has eliminated the city’s ability to choose options allowed under 436: have an emergency manager, request mediation, file bankruptcy or enter into a consent agreement with the state. Gov. Snyder signed PA 436 into law just over a month after its predecessor, PA 4, was repealed. More than 50 percent of Michiganders and over 80 percent of Detroiters voted against the law.

Some say the new law mirrors PA 4 in that it gives an EFM the ability to fire elected officials, end collective bargaining and file bankruptcy on behalf of the city.

Rev. D. Alexander Bullock of Detroit Rainbow PUSH, who worked with others to repeal what many called the “dictator law,” says Gov. Snyder’s administration has ignored the will of the people.

“We voted emergency management down in November and they enacted a mirror law. They claim the new law would give the city options and then they maneuvered the EFM in early so those options aren’t available. It’s a state takeover of the city of Detroit,” Bullock said in a telephone interview. “It’s a continued side-stepping of the democratic process. And to bring Orr in early and grandfather him in under the new law continues to represent how Gov. Snyder’s administration continues to ignore the will of the people.”

Further, Bullock said the claim that Orr will be gone in 18 months or less “doesn’t ring true.”

Elected officials decry appoint of EFM in Detroit

As this paper went to press, over 20 elected officials across the state held a press conference denouncing Gov. Snyder’s policy for failing cities. The representatives were from municipalities that include Monroe, Mt. Pleasant, Brownstow Kalamazoo, Saginaw, Ann Arbor and Ithaca.

“His appointment of an emergency manager in Detroit shows how he continues to gut municipal resources rather than empower communities to thrive,” they said.

They continued:

“Since Gov. Rick Snyder took power, we have seen Lansing Republicans make more demands of local government while at the same time slashing state funding for vital services like fire, police and libraries. We live in our communities, we walk our streets, and therefore we know best how to meet our constituents’ needs — rather than a bureaucrat sent from Lansing. We oppose the hostile takeover of Michigan’s cities because we believe local governments hold the potential to solve local problems. We believe Gov. Snyder must act as a true partner, not a reckless, heavy-handed bureaucrat. But most of all, we believe in democracy.”

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