Schaefer technology adviser has potential conflict Head of state board who was liaison on C&P deal works for Northern Telecom

August 02, 1993|By Michael Dresser | Michael Dresser,Staff Writer

Gov. William Donald Schaefer's chief adviser on information technology was a paid consultant to a giant telecommunications equipment supplier at the same time he played a vital role in negotiations that led to an agreement under which Chesapeake & Potomac Telephone Co. would build a controversial $30 million fiber-optic network connecting Maryland schools.

Francis J. Knott, a longtime Schaefer friend and political ally who was named the unpaid chairman of the governor's Information Technology Board (ITB) in February, still works as a consultant for Northern Telecom Ltd., one of several companies competing to sell millions of dollars worth of communications hardware to C&P to equip the ambitious system.

Besides being chairman of the Technology Board, Mr. Knott is continuing his role as the state's liaison to C&P in the development of the system, which would link about 270 Maryland high schools and colleges in a sophisticated two-way "distance learning" network that C&P will build at its own expense. C&P also will donate an estimated $10 million in video equipment to participating schools, which would pay a monthly tariff for the service.

When Mr. Schaefer announced the initiative June 30, he praised Mr. Knott and hailed the agreement as one of his most important achievements as governor. But rivals of the telephone company, notably cable television companies, denounced the agreement as a secret deal that would give C&P a head start in the high-stakes race for control of the "information highway" of the 21st century.

Schaefer administration officials say they were aware of Mr. Knott's dual role, which apparently is legal under Maryland's ethics laws. They said Mr. Knott disclosed his Northern Telecom ties to other members of the commission and did nothing in his role as panel chairman or state negotiator to advance the interests of his client. C&P executives say that in their dealings with Mr. Knott he has done nothing to solicit business for Northern Telecom and that he has been a tough bargainer on behalf of the state.

Mr. Knott did not return phone calls last week. But through his lawyer, Theodore Sherbow of Baltimore, he sent a written statement to The Sun that said his efforts in the C&P negotiations were "100 percent focused on the best interests of the state."

The statement did not address any aspects of Mr. Knott's relationship with Northern Telecom, including how much he is paid by the company. Describing such inquiries as "an irrelevant tangent," Mr. Sherbow said Mr. Knott would have no further statement. "You got what you got, period," the lawyer said.

Possible taint

But opponents of the state's deal with C&P pointed to Mr. Knott's consulting arrangement with Northern Telecom as evidence that the Schaefer administration's telecommunications negotiations might have been tainted by bias.

Wayne O'Dell, the leading spokesman for the state's cable TV industry, described Mr. Knott's double duty as "improper and inappropriate."

"The potential for conflict exists regardless of it being C&P, XYZ Cable Co. . . . or whatever," said Mr. O'Dell, president of the Cable Television Association of Maryland, Delaware and the District of Columbia. "It's natural that any bidder would look at it and say Northern Telecom has an inside track because their consultant is chairing the process."

He said his industry likely will bring its own proposals before the board and is concerned that Mr. Knott's Northern Telecom ties could compromise his objectivity.

John O'Donnell, executive director of the State Ethics Commission, said that as chairman of an advisory board created by executive order rather than by statute, Mr. Knott is not subject to the state's conflict-of-interest laws and is not required to disclose his outside interests.

Mr. O'Donnell said that exclusion is the result of a policy decision by the legislature that it would be difficult to tap into the expertise of people in private industry if strict ethics rules were imposed on informal advisory boards.

"Statutes make a presumption that these conflicts are there," Mr. O'Donnell said. "It's something you buy in these informal groups to get that expertise."

But an outside expert in government ethics questioned whether a dual role such as Mr. Knott's met a broader ethical test.

Paul Smith, the retired chairman of Pennsylvania's state ethics commission, said that in circumstances such as Mr. Knott's, a member of a public board should recuse himself from dealings with a potential buyer of his client's wares because of the appearance of a conflict of interest.

"It would give the appearance to a reasonable person that there's some hanky-panky going on or that it's too close for comfort," Mr. Smith said.

Clearly, Mr. Knott's ties with Ontario-based Northern Telecom are close. Although Mr. Knott's business is based in Norcross, Ga., a secretary in Northern Telecom's Montreal office takes messages for him.

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