The sale of Memphis Networx to a Colorado telecom company for $11.5 million might not be a done deal. Even if it is, efforts are building to demand details of the deal. And the sale may come with a side agreement for a pound of political flesh.

The City Council's decision Tuesday to spend $33,000 on an audit of the fiber optics company doesn't resolve a dispute about whether the council or anyone else can block the sale. But it is the second action in as many weeks that suggests questions about the sale by Memphis Light, Gas & Water Division (MLGW) will linger even if it is a done deal.

Pointed queries

Seven state legislators from Memphis sent a letter last week to the Tennessee Regulatory Authority (TRA) posing a list of 42 questions they want answered.

All sides in the continuing debate agree the sale of Networx must win the approval of the TRA. It is the state body that regulates private utilities including information technology. But TRA officials have said they aren't sure if all of the questions fall within the scope of the four-member regulatory body.

Council member and mayoral candidate Carol Chumney came up with 55 questions and other council members added more to the list for the auditors. Some of the questions are identical to those posed by the legislators.

"I think the fact that $30 million of the public's money is now gone - we need to get the answers to what has happened," Chumney said. "There are a lot of questions raised in terms of executive compensation, in terms of who the creditors are, why there was such a rush to sell the company, who the investors were. Was this legal to even have a private venture like this to begin with?"

The audit will be supervised by the city comptroller's office. The money for the audit will come out of the comptroller's budget. Two accounting firms, Thompson & Dunavant PLC and Rhea & Ivy PLC, are being considered for the job, Chumney said.

It doesn't grow on trees

MLGW board members accepted an $11.5 million bid last month from Communications Infrastructure Investments (CII) of Louisville, Colo., to buy Networx. Before the vote to accept the bid, utility board members acknowledged it would mean all but about $1 million of the approximately $30 million in public money invested in Networx would be lost.

Council members oversaw those infusions of public money and approved them over the years before finally saying no two years ago. The council discussed trying to block the sale. City Attorney Elbert Jefferson said the council has no power to stop it.

Some council members questioned Tuesday whether an audit matters if the sale can't be stopped.

"What are we going to learn and what can we do about whatever we learn in this audit?" Council member Brent Taylor asked Chumney at one point. "That last thing I want to do is to make (the total loss) $30,033,000, if there's not anything we can do about what we learn."

Council attorney Allan Wade told Taylor it is his legal opinion that the council can take action and at least demand answers.

"It has been sold but it's been sold subject to TRA approval and whatever other regulatory approvals are necessary," Wade said, explaining that he considers the council a regulatory authority. "We have a franchise with them and we have the authority to approve the franchise. They take the position that it wasn't the transfer of a franchise. But we arguably do."

That was enough to convince Taylor.

Council member Barbara Swearengen Ware already was convinced. She proposed the audit in July but the move was stalled after Jefferson weighed in.

"I need to know how badly they've messed us over, how badly they have mismanaged and what they've done to public dollars," Ware said Tuesday.

The council vote was 9-2 in favor of the audit with Council members Scott McCormick and Jack Sammons voting no. Council members Joe Brown and Myron Lowery were not present when the vote was taken.