The Golden Spigot has got some brass.
That’s the only way to explain the explanations coming from the Santa Clara Valley Water District.
Last month, San Jose Inside published emails from a top district attorney, Leslie Orta, who noted in September 2014 that CEO Beau Goldie violated rules by amending contracts with RMC Water and Environment, without approval from the board of directors.
Goldie and top administrative staff have said for months that all dealings with RMC were done by the book, despite concerns of improprieties being raised by district staff for more than a year and a half. The matter, which is going to the district’s audit committee for further review, has received extra scrutiny because one of Goldie’s top administrators, Melanie Richardson, is married to a principal owner of RMC, raising conflict of interest concerns.
But the district remains steadfast, insisting in emails to San Jose Inside that Orta’s legal opinion was incorrect and subsequently overruled:
“General Counsel, in addition to District management, ultimately concluded that the intent of the board, though not explicitly stated, was that the CEO was delegated authority to take all necessary actions, including executing the contract, and, if necessary, amending the contract, to complete the project, as long as the project had funding.”
This is some legalese gymnastics, but the explanation suggests the CEO and general counsel Stan Yamamoto know better than the publicly elected board and can read minds and assume “intent.” But it gets crazier. How did the district come to this opinion?
Conversation. And only conversation.
District spokesman Marty Grimes told San Jose Inside in an email, “There was no written legal opinion generated when that determination was made.”
The mechanics of such a scenario mean Orta, a respected attorney for the district, sounded alarm bells and the CEO and the district’s top counsel, Yamamoto, got together to discuss the issue. Then they moved on without a single note or correction.
San Jose Inside called Yamamoto to get a further explanation about how district decisions are made. The attorney cut off the first question by twice yelling, “What about ’em?”
When told the questions were about RMC business, Yamamoto said, “I cannot disclose to you any advice that I’ve given. I’ve told you that before and I’m telling you that again, and that’s the end of the conversation.” Then he hung up.
The district documents everything: memos, emails, legal opinions, write-ups for racist and homophobic emails shared by staff; everything.
It even has a so-called “firewall” arrangement to keep Richardson away from RMC business, although the district refuses to release the document, dubiously citing attorney-client privilege.
And yet, the general counsel thought a potential violation of rules by the CEO—involving a company that stood to gain millions and also happens to be owned by the spouse of a top district administrator—was not worth picking up a pen or drafting an email. It was as casual as Yamamoto and Goldie asking about each other’s weekend, or debating where to go for lunch.
But then something happened. Despite the in-house legal determination that the CEO did nothing wrong and had authority to do whatever he wanted with the contract, staff started taking amendments on Lower Silver Creek to the board.
In these actions, the district actually defends its actions as a model of transparency (emphasis added):
“With this project, even though staff concluded that Board approval of contract amendments was not required, bringing them to the board was done in the interest of transparency, to inform the board and the public of the status of the Lower Silver Creek project, and to confirm the Board’s support for the project’s continuation.”
Two things about this statement:
- The only three amendments on the Lower Silver Creek project did not involve RMC, and they were brought to the board after Orta’s September 2014 emails noting the CEO broke district rules on amendments.
- Take a look back at the intriguing use of capitalization of the word “Board” and “board.” Perhaps the district was just exhausted from tapping the shift button to spell “Board” 18 times prior in the email, but there’s something subliminal about seeing a big word like “Board” before “approval” and “support,” and then lowercasing to “board” when admitting previous decisions bypassed a transparent process.
Orta wrote two emails stating that the CEO broke district rules by twice amending RMC’s Lower Silver Creek contract. On Sept. 10, 2014, she told chief operating officer Norma Camacho and the CEO’s top staffer, Meenakshi Ganjoo:
“Regarding the LSC program management agreement with RMC, On April 28, 2009 the board approved the sole source transaction and delegated authority to the CEO to approve the agreement (along with several others), but the board did not delegate authority to amend the agreement, nor any of the other sole-source agreements approved in that same board action discussed in the same memo. The agreement was amended subsequently, so in violation of board policy.”
That’s about as clear-cut as it gets. Orta, who is well respected by her peers, wouldn’t make such an accusation lightly. But her superiors ignored and overruled her opinion without so much as a post-it note.
San Jose Inside pressed the district for an explanation, and the response cited the Executive Limitations policy in justifying the CEO’s unapproved amendments on RMC work. This same document recommends: “With respect to purchasing and contracts activities, use a fair, open and expeditious process and stay within the Board’s authorized expenditures.”
One could argue the decision to not even mention the amendments to the board would fall far short of a commitment to openness. Also, neither Orta’s emails nor Yamomoto and Goldie’s unwritten overrule were discussed in October, when staff delivered a two-hour presentation to explain all actions related to RMC.
Gary Kremen, chair of the board, said he intends to make sure future decisions are vetted by the board rather than fast-tracked by the CEO.
“I will be spearheading an effort to ensure such financial commitments by the district are explicit and not someone’s vague interpretation of intent,” he said.
Changing the culture of the district requires change at the top, and it appears machinations are in the works. Last month, the board gave the CEO a 5 percent raise, retroactive to July 1. On its face, this would seem bizarre, as Goldie has been on the hot seat for months. The raise, which was granted for accomplishments in the prior fiscal year, was passed on a 5-1 vote with director Barbara Keegan opposed.
But in granting Goldie the raise, sources say, steps are being taken to oust him sooner than later. The raise could be seen as a bargaining chip to entice the CEO out the door, and Goldie could step down or take a leave of absence as early as next month.