Political Practices Omission

State agency blows investigation into HB scandal

Photo by Jack Gould"The Mission of the FAIR POLITICAL PRACTICES COMMISSION is to promote the integrity of representative state and local government in California through fair, impartial interpretation and enforcement of political campaign, lobbying, and conflict-of-interest laws."

You can almost hear a fife and drum patriotically tweedle-rumbling in the background as you read the charter of the California Fair Political Practices Commission, or FPPC.

The FPPC is the watchdog commission that protects the integrity of the American way, investigating political-corruption complaints against all elected public officials in the state—and punishing those officials when the complaints turn out to be violations of the law. Because of the commission, citizens can inspect the financial records of candidates' campaigns and, after public officials have been elected or appointed, the details of their personal finances.

The FPPC mandates that every public official fill out an annual Statement of Economic Interest, outlining finances, salaries, property ownership and personal investments. The commission enforces the law with the bluntest political instrument:the dollar sign. In the past decade, it has imposed hundreds of thousands of dollars in fines for crimes ranging from improper disclosure to voting on issues of personal financial interest.

But it's not a perfect system. When you read the FPPC's recent response to a conflict-of-interest complaint by Huntington Beach resident Susan Newman against three members of the Huntington Beach City Council, you can almost hear the singsongy flügelhorn and pennywhistle of Laurel and Hardy.

Nine months ago, Newman asked the FPPC to investigate what she perceived as a clear conflict of interest: three of the four members of the Huntington Beach City Council who approved construction of a Wal-Mart store were also invested in local Pacific Liberty Bank along with Wal-Mart project developer George Argyros. One of the three, current Mayor Dave Garofalo, is also a member of the Pacific Liberty board of directors.

On April 18, the FPPC sent Newman a single-page letter. "We have reviewed your complaint and decided to close this matter without formal enforcement action," wrote commission political-reform consultant Colleen McGee. "The mere fact that they [City Council Members Shirley Dettloff, Pam Julien and Garofalo] made decisions that affected a development of a fellow investor does not constitute a conflict of interest."

This narrow interpretation of the law was debatable. Dettloff and Julien may be mere "fellow investors," but Garofalo is a member of the Pacific Liberty board of directors, which had been seeking investors so that the fledgling bank could open for business. Argyros' last-minute $100,000 investment directly affected the status of the bank.

But even worse—simply wrong, in fact—was the next line of McGee's ruling: "In addition, the City Council members reported their investment in Pacific Liberty Bank on their 1999 Annual Statement of Economic Interests."

This is simply not true. Of the three city council members in question, only Julien disclosed her Pacific Liberty investment on her 1999 economic interests form. In an interview with the Weekly ("Gang Bank," Nov. 26, 1999), Dettloff admitted she hadn't included what she called her "paltry" $3,000 investment because she thought it was too small to appear on her disclosure form—despite the fact that the form explicitly requires listing all investments greater than $1,000.

Garofalo's 1999 personal disclosure form was a masterpiece of vague description and outright concealment. First, he filed his form five days late—and, coincidentally, one day after he voted to approve Argyros' Wal-Mart project. Second, the form does not disclose the $50,000 of Pacific Liberty stock he purchased in 1998—the year covered by the 1999 financial-disclosure statement. Third, when Garofalo filed an amendment to his form on May 31, 1999, it was ostensibly to disclose a loan he'd received from Pacific Coast Bankers' Bank. But, in a scribbled note at the bottom of the form, he explained in vague terms that the loan was "for stock in a start-up company." The company he was referring to is Pacific Liberty Bank, although no one could know that by simply reading his disclosure form.

The Weekly's attempts to get an explanation from Garofalo for the vagaries of his disclosure form went nowhere. So did the Weekly's attempts to clarify the confusion and errors in the FPPC's response to Newman's complaint. McGee, the enforcement consultant who signed the letter to Newman, refused to comment on the investigation. When the Weekly pointed out that the 1999 statements did not include the disclosure McGee mentioned, FPPC media director Sigrid Bathman abruptly said she "couldn't discuss the details of the investigation" —even though that investigation has been closed for more than a month.

For her part, Newman has responded in the only way left to her—by sending another letter to the commission detailing the errors and flaws in the first ruling and requesting that the investigation be reopened.

"I was very disappointed that you seem to have dealt with my complaint in such a cavalier fashion," Newman wrote in her new complaint. "At the very least, we are dealing with simple nondisclosure. Without this disclosure, Huntington Beach residents lacked crucial information when it came time for Dettloff and Garofalo to vote on the Wal-Mart project—a project that greatly benefited their fellow bank investor George Argyros."

 
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