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DRUNK WITH POWER

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McKay explains her strained professional relationship with the superintendent this way: "I think Hugh Ennis doesn't like me very much. I think the department likes me because I've stood up to him." Then she adds: "Maybe I'm being paranoid, but I want you to make it clear that all these allegations come from inside the department and not from me. He's going to think I made these allegations. He always thinks so.

"He's going to be hysterical that I even talked to the newspaper."
McKay supports Senate Bill 1154, which, if passed by the legislature this session, would give the board absolute and sole power to set liquor policy. The seven-member Liquor Board is technically part of the Department of Liquor Licenses and Control. But the Liquor Department is a unique agency--the superintendent and the board are not by law responsible to each other and are equally powerful. The Arizona Auditor General pointed out in 1987 that someone ought to be in control, that the responsibilities should be more clearly divided by state law.

The way it works now, the superintendent has a $2.1 million budget to direct a staff of about fifty people who monitor about 8,000 licensees statewide, mete out fines and punishment to establishments that break liquor laws and grant new licenses.

The board, on the other hand, hears appeals of license holders who don't like the superintendent's discipline. It also hears cases of "protested" licenses, which means that the license applicant is flagged for a board hearing. Usually, a protested applicant has an allegedly touchy background or is in trouble, for, say, back taxes. What bothers McKay is that the board has no way of knowing how many licenses should have been protested by Ennis' staff but escaped board hearings.

Recently this has happened at least twice.
Harold Freeland was granted a license in November 1989 for a Mexican eatery in north Phoenix called T.J.'s, according to department records. He got the license without a board hearing, despite an unusual history.

Freeland's file includes a long list of arrests that he admitted to. He said he'd been arrested in 1975 for "wagering on sports" and was fined $4,000 and put on five years' probation. Plus, he owned up to arrests for disorderly conduct and insufficient funds, and he had numerous speeding tickets.

This isn't the type of case that should skirt by without a hearing, says McKay. In March 1990, Leslie Newton's case slipped through the cracks. This angered investigator Liz Lenzen, who wrote in a scathing memo that she had wanted the board to hear the case. Newton was automatically granted a license, however, because a key procedure was ignored.

Lenzen said she marked Newton's file with a stick-on blue dot, the customary way to tag a case to be set for a board hearing. The licensing department retorted in a memo that it hadn't seen the blue dot. This bureaucratic nonsense caused Lenzen to lose patience. "I am willing to take a polygraph exam if necessary," she wrote. Then she blasted Ed Cassidy, another ex-Phoenix cop whom Ennis hired to head the licensing division: "I feel that I am again being harassed by Ed Cassidy in a lame attempt to have a mistake he made covered up. I feel at this point very intimidated to point out problems and solutions . . . ." Frank Malody, a former Phoenix police officer whom Ennis hired to conduct internal investigations, suggests that people who gripe about Ennis and Jonovich are motivated by "payback and revenge." He says his bosses hold employees to a "higher degree of accountability." While not commenting specifically on his investigations, Malody says Ennis and Jonovich "started new work standards and work ethics that these people weren't used to. Instead of adapting, the turmoil increased."

"These are honest people," he says of Jonovich and Ennis. THE MOST PUBLIC of recent Liquor Department follies--the Skybox Escapade--began in 1988. That's when the Metropolitan Sports Alliance, a nonprofit group of business people obsessed with bringing professional sports to the Valley, sent out letters promising alcohol in skyboxes during professional football games.

Enter Ennis, who in the spring of 1989 privately carved out a deal with ASU attorney Bruce Meyerson. Ennis says the deal had Mofford's approval and was "perfectly legal." In a nutshell, they figured out a way to skirt the law that bans the consumption of alcohol on state university property by arranging for an ASU "skybox liaison" to contract with the Biltmore Hotel and Sun Devil Liquors to provide food and booze for the skyboxes. Attorney General Bob Corbin was not consulted. Neither was the Liquor Board.

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Terry Greene