Pension Board Trouble
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January 29, 2010 – The California Supreme Court dismissed conflict-of-interest charges against five former city pension board members. We discuss the court ruling and how this will impact San Diego.
Related story: Pension Board Trouble
GLORIA PENNER (Host): On Monday, the state’s high court dismissed conflict of interest charges against five former city pension board members. The case against a sixth former board member may still proceed. We asked San Diego City Attorney Jan Goldsmith whether people should be allowed to sit on boards that make decisions that could benefit them personally. Here’s what he had to say. JAN GOLDSMITH (San Diego City Attorney): I'm not a great fan of having board members who participate in decisions that they may have some benefit in. But it’s inherent in our society that whenever you have a city council, or a board of supervisors, or a school board, you're going to benefit or have some detriment arising out of decisions. If I'm on a school board and I have a child in school, it’s going to have some effect. As a city councilmember, the quality of life. So those types of general things I can't disagree with. That’s how we govern ourselves. We have to make sure that we hold people accountable. And if there's anything specific, for example if they own property across the street from the land use decision that’s before them, then they ought to recuse themselves. the term 1090 has been thrown around and people have been accused of crimes. It has a major importance to San Diego. I don’t think it will affect our pension issues one bit one way or the other. But it kind of brings back an old wound and the scab is lifted for a few days. For those of us in public law, it gives some definition and some meaning by this highest court in our state. And we appreciate it because I no longer have to tell council members or board members that, you know, the law is a little uncertain on 1090 and here’s our best shot at the opinion. PENNER: Joining me now to discuss the ruling and its implications for San Diego is John Warren, editor and publisher for San Diego Voice & Viewpoint. Well, John, you heard what the city attorney said. But first let’s understand why did the justices throw out the conflict of interest charge although the five former board members clearly benefited from the pension increase? JOHN WARREN (San Diego Voice & Viewpoint): Well it got before the court on a procedural issue, because you have substance and procedural issues at law. The district attorney found that there was probable cause based upon their interpretation of another provision in statute, section 995 the penal code. And what the court said in effect was we’re not going to go forward with this, we’re going to petition. The Supreme Court says that the petition, which came to us asking us to set aside this action, was indeed in order. Because there was no conflict in the context of 1090 as Jan just made reference to. There was an exemption for these five people because they fell into a greater class of 20,000 and they didn’t benefit directly in the context of a conflict of interest. PENNER: Ok, but Jan Goldsmith did say this is kind of going to make his job easier. It’s now defined. So what does constitute conflict of interest? WARREN: Well that’s a good question. The way the statute is written where they can identify a benefit such as in the case with the sixth person who has to go to trial – PENNER: Ron Saathoff. WARREN: Ron Saathoff. They identified how he would benefit salary-wise. But the conflict goes back to an old common law principle that says you can't serve two masters. And so if you have an interest and you're serving, then that’s a conflict. What Jan does is speak to the exception that’s found that the court went to, which said there are some things that are so much a part of what we do that people are allowed to serve even though there appears to be a conflict. And we will exempt them and say that their service is not conflict. This is the clarity that he was making reference to that he now has based upon the Supreme Court decision. PENNER: Alright so now what implication does this have for boards, commissions, councils now throughout the state in terms of discouraging those officials from making decisions that would benefit themselves? WARREN: Well I don’t think the discouragement goes so much to the individual office holders as it does to the prosecuting entities which are now forced to go beyond just looking at penal code section 995 saying there's a conflict therefore we’re going to bring charges. Now they have to look at what the exemptions are and whether or not the service in consistent with the exemptions laid out in the court’s opinion. That’s the clarity that it brings to the state. And that’s the extent to which I think Jan makes reference to everyone benefiting. PENNER: Now but these five, are they off the hook now? WARREN: Well no. They're off the hook in terms of the procedural issue that stopped them from going to trial, but they're still facing federal charges in terms of fraud, the SEC, and the very fact that the federal government set aside their cases until after the Supreme Court decision. So we don't know what the impact now is going to be in terms of the federal charges they face of fraud an some other issues. PENNER: These justices that made this decision, there are seven of them. Six of them were appointed by republican governors. One was appointed by a democratic governor, Jerry Brown at the time. Do they have a characteristic? Would this be considered a conservative court versus a liberal court? WARREN: I think this court on this issue would be considered a court that has looked at its duty as the highest court in the state and has decided based on law and not politics – what is fair and equitable in terms of the laws in the state and the people involved. And I think that overrides who appointed them and what particular affiliation they might have had. PENNER: But it makes us take a look at what the courts are doing. We just had a kind of controversial ruling by the United States Supreme Court which allows corporations to participate in political campaigns without limit to how much they can participate. And during a State of the Union Address, the president said he was going to look for some kind of law to bring that under control. Might there be some kind of a state law passed that would make a conflict of interest more rigorous? WARREN: Well because of our check and balance system the Supreme Court – as the highest courts in the land of the state – they will rule on the law but the congress and the legislative body – in this case the state legislature – they always have the right to make law. And so when they're in a disagreement with a court decision, they can make law legislatively to override that. What we have to do is wait and see if that becomes an issue in California. PENNER: Ok, well thank you very much John Warren. WARREN: Thank you.