The Minnesota Department of Commerce is tangled up in politics — again.
This is not exactly new territory for the state agency. With a mission of regulating commerce, the department crosses paths with the banking industry, insurance firms, energy companies and telecommunications providers.
That means the department often has a target on its back, says former Commerce Commissioner Jim Bernstein, who ran the department under former Gov. Jesse Ventura. “Our oversight is of a number of industries that people interact with everyday,” he said. “If I made a decision that favored consumers or rate payers, I’d hear from the industry. If I leaned the other way, I’d hear from consumers.”
The latest controversy involves Community Action of Minneapolis, which was raided after investigators discovered the agency was misusing millions of dollars in federal funds aimed at helping low-income people pay their heating bills. The state Department of Commerce is the pass-through point for the federal money.
In the Minnesota Public Radio report that set off the latest round of scrutiny, Commerce Department staff members said the department had been aware of the misuse of funds for years, but that Commissioner Mike Rothman would not act on the warnings because of political sensitivity, a claim Rothman does not deny.
“I understand the politics, because the leadership of the Community Action agency and well-known and powerful,” Bernstein said.
Bernstein had his own brush with powerful interests. In 2002, toward the end of his tenure as commissioner, Bernstein had fined American Bankers Insurance $3.5 million for illegally selling credit-protection insurance.
But the company, based in Florida, settled for a much smaller fine a year later after the Pawlenty administration came into office. A legislative auditor’s report confirmed that American Bankers Insurance had made campaign contributions to both the Republican and DFL parties, although stopped short of saying that the contributions led to the smaller fine.
Bernstein said he’s “loathe” to criticize Rothman but added, “The agency [Community Action] was out of control. The board of directors was utterly incompetent. It appears based on media reports that the leadership was corrupt. Should the department have caught this? You can make a case that says, ‘yes.’”
Bernstein said during his tenure between March of 1999 and December, 2002, the Low Income Heating and Assistance Program was housed at the Department of Commerce. “I had full responsibility and full authority to make sure the moneys were being spent responsibly,” he said. “The question is how much authority the department now has with oversight.”
The authority would still seem to be substantial, given the reported comments from department staff and the fact that the LIHEAP national website cites the monitoring reports in Minnesota as an example of how states can determine whether the federal money is being used properly.
Republicans have seized upon the implication of political favoritism. Incoming speaker of the House Kurt Daudt says Rothman should step down if he “chose to put politics before protecting Minnesotans.”
This isn’t the first time Rothman or his department has been the focus of Republicans’ attention. Earlier this year, Republican candidate for governor Jeff Johnson charged that politics played a part in in the Commerce Department’s approval of low health insurance rates offered on MNSure by Preferred One health insurance company. Preferred One exited the exchange, saying the low rates were not sustainable.
Bernstein shrugs at calls for resignation. “It always happens with this position,” he said.
But Rothman should not expect that the scrutiny of the Department of Commerce to diminish, Bernstein said. “Everybody uses the phone, goes to the bank, uses electricity,” he said. “And, as a result, you are going to deal with the legislature all the time. They pay close attention to what the Commerce Department is doing. It is a political position.”