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A Murky Side to Water Business

Two Carson indictments highlight the problem of corruption in a crucial industry. Experts say there is little oversight of obscure local agencies.

August 03, 2003|Megan Garvey | Times Staff Writer

There's the Irvine Ranch Water District employee accused of skimming $2.2 million from the books. And the Santa Margarita Water District officials who treated themselves to limousine rides and four-star hotel rooms, as well as sheepskin seat covers and $125 wax jobs for their cars.

Not to forget the San Francisco-area water district lab supervisor who was caught using an agency scale to weigh his cocaine. After arrest and conviction on drug charges, he went on to become general manager of the city of Pacifica's 13,000-customer district. Later, he was investigated and convicted on charges of misappropriating funds, including billing his employer for more than $9,000 in meals at a local restaurant and buying a go-cart for his son.

Little-noticed water districts provide Californians with an essential public service, ensuring clean drinking water for tens of millions. But there has long been a dirty side to the industry, revealed in a string of public scandals.

The latest came last week with the indictments of two Carson water district board members, one the son of a U.S. congresswoman, accused of extorting tens of thousands of dollars from contractors hoping to do business with the agency.

For The Record
Los Angeles Times Tuesday August 05, 2003 Home Edition Main News Part A Page 2 National Desk 1 inches; 32 words Type of Material: Correction
Water district -- An article in Sunday's California section incorrectly suggested that a federal investigation was ongoing involving corruption at Chicago's Metropolitan Water Reclamation District. The investigation was completed several years ago.

"This is serious stuff. And a large part of the reason it's happening is because no one is watching the store. They are the hidden governmental agencies," said Robert Stern, president of the Los Angeles-based Center for Governmental Study. "These are obscure agencies that are run by elected officials, so there's no one else overseeing them."

Water districts and their sister waste management agencies range in size from a few dozen customers in rural areas to the nearly 17 million served by the Metropolitan Water District of Southern California. Their budgets can be massive, but their meetings, although open to the public, are rarely attended by either community members or representatives of the media.

In the decade-old case of the Santa Margarita Water District's top officials, temptation came in the form of $60,000 worth of gifts they eventually admitted taking. That money was on top of spending that prosecutors called "excessive" and "disgraceful." However, because the standard for showing a misappropriation of public funds was "shocking and offensive behavior," prosecutors did not file theft charges. Four former officials either pleaded guilty to criminal charges of influence peddling or paid fines and performed community service.

Industry officials say such cases are examples of how a few wrongdoers spoil the reputations of a vast majority who do jobs well and honestly.

"Not only do I cringe," said Mike Dillon, who has been executive director for 30 years of the California Assn. of Sanitation Agencies, "I've said to our members: What's happening here gives us all a black eye." Dillon and others in the water and waste business said they are continuing to work for clear and consistent ethics policy across the industry.

Some of the potential ethical lapses -- and outright criminality -- are laid out in the charges against the two West Basin Water District Board members, R. Keith McDonald and Tyrone Smith. Both men face prison sentences of nine or 10 years if convicted on charges of extortion for allegedly soliciting bribes from contractors in exchange for awarding contracts. McDonald is the son of U.S. Rep. Juanita Millender-McDonald (D-Carson).

As board members handling an agency with a $100-million budget, they were eligible for meeting attendance fees that averaged about $15,000 a member last year. They could collect a monthly car allowance and receive medical and dental insurance for themselves and their families. They also were reimbursed for travel and expenses, at a cost last year to the public of $5,000 to $38,000 per member -- all funds collected within the rules. The board has five elected members.

But McDonald, prosecutors allege, also ferried money to Carson city councilmen in exchange for their votes on lucrative contracts with the city, and pocketed a hefty cut of the bribes himself. Smith was indicted on a charge of extorting $25,000 from an investment banker in exchange for his promise that the firm the banker represented would handle the refinancing of $140 million in debt for the district, which serves South Bay cities.

Scandals in water districts have been reported across the nation. There is a massive federal investigation into problems in Chicago's nearly $1-billion-a-year Metropolitan Water Reclamation District. Charges of influence peddling and bribery have been raised in cities like Atlanta and Bridgeport, Conn., that have contemplated turning over the water duties to private firms.

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