Vote split 5-2
Protesters delayed vote with civil rights songs; two arrested
Mass actions May 5 and June 22 to challenge EM rule in Detroit and state
By Diane Bukowski
April 17, 2013
DETROIT – The Detroit City Council voted 5-2 for a “debt re-structuring” contract with the Jones Day law firm April 16, despite loud protests including civil disobedience, and legal opinions from two of three city attorneys that it represents a clear conflict of interest. Many protesters said Jones Day will enable a complete takeover of Detroit by the big banks, which the firm represents.
A phalanx of fully-equipped Detroit police arrested two protesters, the Rev. Bill Wylie-Kellerman of St. Peters Episcopal Church, and Detroit School Board member Elena Herrada, as they chanted with the rest of the audience, “SHAME, SHAME!” Earlier, the public brought a one and a half hour halt to the vote by kneeling and singing the civil rights anthem, “We shall not be moved.”
The two were charged with misdemeanors and released at 4 p.m. from the Northeast District police station. They are to appear in 36th District Court Wed. May 1 at 8:30 a.m.
“It is common sense that the city should not be hiring the same law firm to address its debts that represents its lenders,” objected Councilwoman JoAnn Watson, who along with Councilwoman Brenda Jones voted against the contract.
“We owe hundreds of millions of dollars to banks and bondholders that Jones Day represents,” Watson said. “When the current federal lawsuit gets rid of PA 436 [Michigan’s new emergency manager act], this contract would not be undone. That is the same reason the Council should not have voted for the PA 4 consent agreement. Kevyn Orr has the power to make the contract himself—let him do it. The Council will knowingly be waiving the whole issue of conflict of interest by voting for this.”
The PA 436 lawsuit has now been assigned to U.S. District Court Judge George Caram Steeh, an appointee of President Bill Clinton with a relatively progressive record. He has extended the time for the defendants including Gov. Rick Snyder to respond to the complaint to May 15, 2013.
Antonio Cosby concurred with Watson during public comment.
“With its list of financial clients, Jones day cannot represent the interests of the people. The EM law requires them to protect the interest of banks. There is the complicity of the Council itself—your approval is not needed. Force the EM to make the contract with his own partners. To the people: resist the EM!”
Demeeko Ashawn Williams, a Wayne County Community College business administration major, and member of Project #Save Detroit 2013, said, “I am disappointed in the Mayor and the six city council members who sold out, caved in to the EM, on the Consent and Milestone Agreements, and now this contract. What will it take for several hundred thousand people to stand up and fight back against malfeasance and corrupt government? You have the power to say no to Jones Day. We are not broke. I’ve studied all the documents—you have been bamboozled. You all can say no today, close the door and declare war on Republican oppression in the city of Detroit.”
Attorney David Whitaker, head of Council’s Research and Analysis Division, said, “There is a major problem with Kevyn Orr being the Emergency Manager, with all power the city has and more, and his former firm being the restructuring counsel .”
Orr will directly supervise five highly-paid Jones Day partners, including his former boss, Jones Day managing partner Stephen Brogan.
Whitaker also noted, “The core restructuring work in the contract largely deals with balance sheet issues, getting the city’s enormous debt under control. But there are a number of other issues that would be expected for any firm that are outside the core scope of work. It might be expected that the contract would go way beyond $3.3 million for six months.”
In a letter to Mayor Dave Bing attached to the contract, Brogan said he wanted to “clear up any doubt” that more work would be required. He said that would include asset dispositions, privatization, new debt instruments, and new labor contracts, among other issues. He also cited the city’s Pension Obligation Certificate debt to Jones Day clients UBS AG and SBS Financial, which now amounts to over $2.5 billion including penalties.
The Detroit News’ Daniel Howe quoted Bill Nowling, Orr’s spokesman, “One of the things that Kevyn wants to do is pick off that low-hanging fruit. He said on Day 1, if you want a roadmap to what I’m going to do, look at the consent agreement.”
Howe went on to say that Orr will imminently announce the takeover of the City’s Planning and Development Department by the Detroit Economic Growth Corporation, a “quasi-public” entity dominated by corporate board members, a move cited in the Consent Agreement. The takeover would likely mean the elimination of PD&D city workers, and would affect the city’s administration of $150 million in federal funds allotted annually, including $33.3 million in Community Development Block Grants (CDBG) and $93.1 million for Neighborhood Stabilization programs.
Howe added that other departments using federal dollars will also be targeted. The city has already divested itself of the Health and Wellness, Human Services, and Workforce Development Departments, including their workers and contractors. The majority of funding for those departments came from the federal government.
Acting Detroit Corporation Counsel Edward Keelean said at the hearing that he has absolute confidence that Jones Day is ethical and will disclose all conflicts of interest. He said the state of Michigan gave the nod to Orr as EM, and that there was a meeting in January at Metro Airport between Orr, other Jones Day partners, and government officials. He said that the Miller Buckfire law firm, now on contract with the city as its “investment banker,” vetted Jones Day and other firms.
Miller Buckfire has been bought out by Stiffel Financial, which has had numerous lawsuits for fraud brought against it by municipalities and the Securities Exchange Commission.
Law Department attorney Louis Smith, who worked closely with previous Corporation Counsel and now Mayoral candidate Krystal Crittendon, disagreed with Keelean.
“I believe there is a conflict of interest, although I do believe the process is clean and Orr is ethical,” Smith said. “But there remains the appearance of impropriety, which with the history of corruption in this city, means the second highest ranking law firm should have been selected.”
Councilwoman Brenda Jones said the firm had falsely claimed to represent three governmental entities in bankruptcy proceedings, Orange County and the City of Stockton in California, and Jefferson County, Alabama. She said that in fact it represented only one government, and its attorneys represented creditors in the other two cases.
Keelean claimed that the attorneys in those cases were not working for Jones Day at the time.
The five Council members voting for the contract were Council Pres. Charles Pugh, Pres. Pres. Pro-tem Gary Brown, Councilwoman Saunteel Jenkins, and Councilmen James Tate and Andre Spivey. Councilmen Kwame Kenyatta and Kenneth Cockrel, Jr. were not present.
The five members clearly had their minds made up, moving almost immediately for a vote with little discussion other than comments from Watson and Jones. Earlier, Orr met with each Council member individually. Only Councilwoman JoAnn Watson took a representative with her, Attorney Jerry Goldberg of the Moratorium NOW! Coalition.
During public comment at the meeting, Goldberg called for a moratorium on payment of the city’s $16.9 billion debt to the banks.
“Under Sec. 11 of the Emergency Manager Act, the EM can modify or abrogate virtually every contract including union agreements, but the Act mandates payment in full of all debts,” Goldberg said. “Section 16 mandates that the EM conduct an investigation of any criminal activity that contributed to the financial crisis. That should include the activity of the major banks, which carried out over 150,000 illegal foreclosures in Detroit, documented at a U.S. Senate hearing. Why should these banks now have first claim on our tax dollars? By voting No, the Council would be sending a message to the banks, who are the real criminals. We must wage a struggle to take back our city from the banks who have destroyed it.”
Abayomi Azikiwe of Moratorium Now! noted, “This firm was heavily involved in the Chrysler bankruptcy, which resulted in the loss of tens of thousands of jobs and businesses in Detroit and nationally. Orr and his law firm are agents of the banks. The people owe the banks absolutely nothing after their predatory lending and fraudulent bond issues. Our Coalition now has over 3,000 pages of debt documents which expose these criminal activities.”
Both announced that a “People’s Assembly to Save Detroit” will be held Sat. May 4 at 1 p.m. at Central United Methodist Church, Woodward and E. Adams in downtown Detroit.
Elena Herrada, who was later arrested, told the Council, “We welcome you into exile with the Detroit Public School Board, operating under a despotic EM despite every obstruction. We welcome you into exile and caution you against captivity. We are going to fight the EM’s, the Educational Apartheid Authority (EAA), led by Mike Duggan, the governor, and certainly Jones Day. Stand up for the children and elders of Detroit!”
Rev. Bill Wylie-Kellerman, also later arrested, recalled that the day was the 50th anniversary of Dr. Martin Luther King, Jr.’s “Letter from a Birmingham Jail.”
“The Council passed the consent agreement last year on the anniversary of Dr. King’s assassination,” Rev. Wylie-Kellerman added. “Dr. King’s letter speaks to me personally. It is addressed to clergy and people of faith, asking where are your bodies and voices in the struggle to condemn attacks in Birmingham. Dr. King said it was time, and that’s what time it is in Detroit today.” Click on LETTER FROM A BIRMINGHAM JAIL for text of Dr. King’s letter.)
Ms. Jackson, a City of Detroit retiree who brought her grandson to the meeting, said,
“Those that are going to vote for Jones Day are the same people that decided to go with the Consent Agreement. Why did you allow Snyder to bamboozle you all in the first place? You did not have to agree with anything, you didn’t read the fine print. What’s the advantage of Orr being here? You have listened to what Snyder said. I told you we need houses in Detroit, and there is over $3 billion in the general city pension system. You are going into my money now—I have a problem with that.”
Ms. Jackson kept speaking despite a police officer coming to her side threateningly, after Pugh told her her time was up.
“The people petitioned for a public vote on PA4, and Michigan voted no EM, Detroit voted no EM,” said Rick Mattson. “I doubt that Orr can balance a checkbook. Jones Day will make a bundle, and the banks will make a mint. What happened to one body, one vote? Disillusionment is growing. An unjust law is no law.”
Rev. Charles Williams II of the Historic King Solomon Baptist Church and head the of the Michigan National Action Network chapter, said, “Jesus threw the moneychangers out of the temple. Jones Day is nothing but a representative for Merrill Lynch and Bank of America, so why would we hire them to renegotiate the city’s debts? Jones Day is the EM, Jones Day and Kevyn Orr in one happy family with the City Council and Bing. We will be everywhere Jones Day is across the world to shine the light.”
NAN is building for a mass march down Woodward Ave. on June 22, honoring the 50th anniversary of Dr. Martin Luther King, Jr.’s march in Detroit in 1963, where he first gave his famous “I Have a Dream” speech. The NAN march is to focus on the disenfranchisement of the majority of Blacks in Michigan, as well as the fight against the banks. For more information on that, call 313-355-2150 or text 313-492-6774.