Tim Sullivan Accused of Conflict of interest 12.05.12

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Top mining official accused of conflict of interest

By Daniel Bice of the Journal Sentinel 12/05/12

Tim Sullivan, the head of the Wisconsin Mining Association, is coming under fire for taking a paid position with a firm that would compete directly with the proposed $1.5 billion iron ore mine in northern Wisconsin.

Sullivan was elected this week to the board of Cliffs Natural Resources, a post that could pay Sullivan as much as $200,000 per year. Cliffs is the principal owner of two large iron ore mines in the Upper Peninsula and one in Minnesota. Sullivan officially joins the board on Jan. 14, according to a company spokeswoman.

"It's absolutely a conflict of interest," said Bob Seitz, chief lobbyist for Gogebic Taconite, the firm hoping to open the large mine in Ashland and Iron counties. Seitz described Cliffs as Gogebic's "main competition" in the production of taconite pellets. 

Gogebic - owned by the Florida-based Cline Group - is urging state lawmakers to push through a bill that would ease state mining rules that the firm says would cause needless delays in the review and regulatory process. Democrats and environmentalists contend the changes would weaken environmental protections. 

Rep. Scott Suder, the incoming Assembly majority leader, criticized Sullivan for not disclosing his ties to Cliffs when he testified before a Senate committee last week on the mining legislation. 

Sullivan told the Senate Select Committee on Mining that he believes an Assembly mining bill that nearly passed earlier this year needs to be modified. Sullivan has expressed private concerns that the Assembly measure would lead to lawsuits and even scare away investors from future projects.

"I find this very disturbing," Suder said of Sullivan's work for Cliffs. "This raises some pretty serious red flags about Tim Sullivan's personal ethics and all of his comments about mining over the last six months."

Suder, an Abbotsford Republican, contended Sullivan has backed away from his earlier endorsement of the Assembly bill - which Gogebic officials favor - because he will soon be receiving a "boatload of cash" from Cliffs. Suder said Sullivan should register as a lobbyist so lawmakers can see that he has a financial stake in the issue.

Reached Tuesday, Sullivan said he couldn't have disclosed at last week's Senate hearing that he was in line to join Cliffs' board. Under federal rules, he said, the company can do this only after the board member is officially elected. 

Sullivan - the former chief executive of mining equipment company Bucyrus International in South Milwaukee - was elected to Cliffs' board on Monday. Federal records show Cliffs' directors each earned between $173,000 and $225,000 in cash and stock awards in 2011.

In addition, Sullivan said he sees no problem with sitting on the out-of-state company's board and advocating on mining issues in Wisconsin. He said he also does consulting work for other mining interests, which he declined to disclose.

"I don't think my work with the association is a conflict," Sullivan said. "But if the association believes it's a conflict and our board believes it's a conflict, I'm happy to step down."

Sullivan noted that it is not unusual for an association to represent firms that compete with one another but join forces to advance the interests of their industry. His group, he said, has two dozen members. Gogebic is not one of them.

Shortly after the Assembly bill died earlier year, Gov. Scott Walker asked Sullivan to bring together mining experts and conservation leaders to try to forge a compromise that would pave the way for the Gogebic mine.

It was the second time the Republican governor had turned to Sullivan for help. In February, Walker appointed Sullivan to serve as a special consultant for business and workforce development as part of the governor's "Working Wisconsin" initiative.

In his Tuesday interview, Sullivan said he views Cliffs and the other mining interests for which he works as potential investors in Wisconsin mining, not as competitors to Gogebic. He said his work for these other firms and investment groups, in fact, helps him in his role as head of the Wisconsin mining group.

Calling the criticism of him "strange," Sullivan declined to say whether he believes he is coming under attack because he is recommending changes in the Assembly-backed legislation. He dismissed any suggestion that he modified his position on the bill because of his connection to Cliffs.

"Between the time that bill was proposed and today, we've learned some things," Sullivan said. "I think the things we've learned is that the bill can be improved and be even better."

Sullivan emphasized that he fully supports the Gogebic mine. 

Patricia Persico, director of global communications for Cliffs, said her company has not taken a position on the potential Wisconsin mine or the proposed mining legislation.

Cliffs announced last month that it was halting production on two of its four lines at its Minnesota mine beginning in January and temporarily shutting down one of its Michigan mines in April.