Water District: CEO Can Do What He Wants, No Paper Trail Needed

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:

  1. 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.
  1. 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.

Josh Koehn is the managing editor for San Jose Inside and Metro Silicon Valley. Email tips to [email protected] or follow him on Twitter at @Josh_Koehn.

8 Comments

  1. Having watched the board meeting last night on this topic; saw the clear cover up. You could tell Keegan (thanks for the vote) was not happy. Mel Mel got her way

  2. What a joke. As usual cover up. And a big fat raise retro to July as if he doesn’t make enough already !!!! And he got a raise prior to that as well in 2013 not sure about 2014 while regular staff received nothing .
    Nice severance package to get him out while district still smells of roses!!! Feel bad Leslie Orta but not unusual for the district to cover up and change wording around to suit the scenario.

    • Friend OF PAULS, OLD AV GUY WHO THEY WANTED OUT BUT HE NEVER GOT A GOLDEN GOLDIE PACKAGE, JUST MORE LIES……. YOU SHOULD SEE ALL THE COVER UP THEY DID FOR IT MANAGERS, AND THE FRAUD THEY ARE TRYING TO GET THE BOARD TO SIGN OFF ON FOR A NEW BOARD ROOM PAUL TOLD ME HOW THE FIRST 3 MILLION DOLLAR BOARD ROOM TURNED OUT TO BE A JOKE WORK DONE MIDNITE TO 6AM LO BID, THEY SHOULD DIG DEEP FOR THE FIRST GRAND JURY THAT CONVENED FOR THE WASTE OF MONEY ON THE GOLDEN PALACE ….

  3. Time for a Grand Jury to take a look at the shenanigans.
    A raise? At a time when users are suffering incessant price hikers amid conservation. There should be a clawback.

  4. “You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time.”
    You hit the nail on the head Leslie!
    Sure we believe the Districts response AFTER the signed amendments were made public as well as Orta’s email! They should have spoke up and given that explanation at the Board Meeting when it was asked of them.
    Hope all involved in this cover up get dealt with accordingly and there is a lot of them!

  5. well they should go after the whole board minus gary who was not going to vote on fraud, but again the board, who has no concept of how to use equipment, voted for another (no price given, but it will come close to 2-3 million for what they want, hd, skype, new control; system, blu ray, (even though they have never had one brought in)
    A board room that is really a church, the building is broadcast ready with line already from comcast, IT mangers lying again about expenditures( all on tape to come back and haunt them all. they think the clerk will run the sytem and not do her clerk duties, that;s how it was in 2000 and they had to hire a tech. They ask the manager what cost were, and they said they did not know well, they have 2 position for av and a temp and them up there is your cost and more for electric etc. just watch the tape on 3 8 2016 so full of lies. https://scvwd.legistar.com/View.ashx?M=A&ID=456057&GUID=57518E24-1647-46C0-B55F-196E03B21229
    STAFF was to come back with 3 designs and cost, were was it, none of it even dug muirhead did not show as same bs lies.
    Staff withheld 2015 Stakeholders Matrix that shows it does not need upgrade.
    Used 2013 Matrix that is out of date.
    Directors and staff have known that this exist. Nobody questioned it. It was a real show last night to approve the upgrade . So much for fiscal responsibility .

    Freedom of information act if you are inclined to see the Stakeholders matrix from 2015 , I would request all copies of 2015 related to AV system upgrade.

    IT Ad hoc
    http://www.valleywater.org/WorkArea/DownloadAsset.aspx?id=12735

    Page 78 and 79

    Agenda last night item 8.1 see links.

    not one question to the tech but a bunch of BS to try to make him look good even though he told them they dont need this nor hd the first room cost 3 million, watch this go over 2 million
    tt