By Merle Moshiri
Special to the Surf City Voice

Last week I sent a complaint to the California Fair Political Practices Commission asking it to investigate what I believe are serious violations of the California Fair Political Practices Act, including failure to report income and conflict of interest voting, by John V. Foley, Chairman of the Metropolitan Water District of Southern California (MWD).

Foley is not an elected representative of the people. He was appointed to the MWD by our own Municipal Water District of Orange County (MWDOC). He was then elected by MWD members to be chairperson of that body.

The details of Foley’s apparent misconduct have been provided in reports by the Surf City Voice and the Voice of OC. According to those reports, Foley failed to disclose over $600,000 in past income, most of it to his wife, from government and private sources. Also, according to those reports, he arguably cast illegal votes (as an MWD director) on matters related to that income.

Those details have been ignored by the OC Register and the Los Angeles Times even though they have been contacted repeatedly by myself and other concerned citizens. That is why I feel compelled to take action as a public citizen: our public officials and our largest self-proclaimed watchdog institutions have failed us, so concerned citizens must act to take back control of their government.

I filed my complaint last week, but doing so was partly the result of a frustrating process that started 10 years ago.

At that time, many of us in living in southeast Huntington Beach became concerned with plans to build a private ocean desalination plant in our area.  Initially, it appeared to be yet another piece of ugly industry being added to our community that already played host to the AES power generator, with its huge smoke stacks, the OC Sanitation District’s sewage treatment plant, the City Trucking depot, and the ASCON toxic waste dump—38 acres of hazardous waste material dumped close to our homes and schools—that still needs remediation.

Did yet another industry need to be built on our share of the coast?

Upon closer scrutiny, we discovered that the company planning and pitching the desalination plant, Poseidon Resources, Inc., had never built a fully functioning ocean desalination plant before.

But Poseidon pitched its project as a purely private one. The public would pay nothing; it would reap the benefits, but without taking the risks.  Four miles of our streets would be trenched for pipelines, but apparently we were supposed to accept that as one of the hazards of living that came with having a home in our area.

As our research progressed, we learned that there wasn’t any real need in Huntington Beach for desalinated water. We also learned that the “no cost to the public” promise was a pipe dream because ocean desalination was the most expensive alternative source of water. By contrast, water recycling (the Ground Water Replenishment System in Fountain Valley), conservation and retention were all much less expensive water sources.

The more we learned about the Poseidon project, the more skeptical we became.

Why would our public officials be so quick to jump on such a super expensive, energy exhausting, environmentally damaging and out-dated form of technology when there were other readily available and more viable means of meeting our water needs?

When we delved into Poseidon’s dealings with our local city and water officials we were struck by the lack of accountability and transparency that we found while those officials were proposing to spend hundreds of millions of rate payer dollars with apparently little regard for how they would be spent.

Positions on water boards may be seen by some as plumb pickings with nice stipends, health insurance, expense accounts and other benefits along the way. But with election or appointment to these offices comes the responsibility to be ethical and follow the law.

I regularly attend many MWDOC meetings.  About a year ago it was announced that John Foley was going to share some office space at the agency’s headquarters in Fountain Valley.  I knew that he was the chairman of the Metropolitan Water District.  I noticed in a MWDOC expense report that Foley’s wife had been paid by MWDOC for consulting services. I asked about the legality of her contract and what the protocol was for selecting her out of all the other possible consultants.  The answers were not readily available.

Now it appears that Mr. Foley violated the law by not reporting his wife’s income (and some of his own) on his 700 forms and that he created an illegal conflicts of interest by voting on desalination issues that his wife was paid to work on and for contracts for companies that she worked for.

When asked by a local reporter about not reporting his wife’s consulting income, Foley said he didn’t know he was supposed to do that.  But Foley, who has been on the MWD since 1989 and undergoes ethics training by MWD every two years, should have known what his reporting obligations were.

So I ask, is his failure to comply with the law from ignorance or arrogance?  Either one does not go far in protecting the public.

Public trust goes hand in hand with transparency and truth.  Those endowed with the public trust have an obligation to give their constituents no cause for doubt.

By John Earl
Surf City Voice

A Huntington Beach activist has filed a complaint with the Fair Political Practices Commission against the chairman of the Metropolitan Water District of Southern California (MWD), John V. Foley, for alleged violations of the Political Reform Act.

Since 1989 the Municipal Water District of Orange County (MWDOC) has paid Foley as one of two appointed (non-elected) public officials who represent it on the MWD board. In turn, in Jan. 2011 MWD elected him as its chairperson for the second time.

As chairman, Foley runs MWD board meetings and appoints all members of all committees. He also attends some MWDOC meetings for discussion but not for voting.

The complaint, submitted by Merle Moshiri, president of Residents for Responsible Desal, alleges a spate of violations by Foley, including multiple failures to report income—totaling at least $640,000—that he received through his wife’s consulting business and another $15,000 earned from his own consulting business.

His wife, Mary Jane Foley, consults for government water agencies and companies to help them navigate through environmental regulations and obtain permits for water management projects, like ocean desalination.

Under California law, spousal income is considered a 50/50 split unless property is legally separated by a prenuptial agreement.

The complaint also alleges Foley cast four votes since 2005 that were illegal because they indirectly related to his wife’s consulting contracts with MWD, MWDOC and other water agencies.

State law requires public officials to disclose all reportable income on financial disclosure (700) forms that are open for public viewing. Those officials must recuse themselves from votes that could result in financial benefit for them or their spouses.

Fines of up to a $5,000 can be levied for each violation.

In an op-ed column published by the Surf City Voice, Moshiri says that her complaint follows a “frustrating process that started 10 years ago” with a city proposal to allow a large ocean desalination plant to be built in southeast Huntington Beach. That process has been marked by a “lack of accountability and transparency,” she wrote.

Merle Moshiri: Photo by John Earl

But Moshiri’s complaint also follows recent disclosures in the Surf City Voice and the Voice of OC (not a related publication) about Foley’s apparent failures to comply with various state conflict of interest laws.

The Surf City Voice first reported that Foley failed to report well over $200,000 of income from his wife’s consulting work (for public agencies only) and subsequently reported that Foley also failed to report $15,000 from his own consulting work.

Last September, Foley told the Surf City Voice that he didn’t know he had to report his wife’s income, stating that that “I never felt it was required. You know, I don’t have no problem with it.”

A month later, however, Foley updated his 700 forms back to 2004 by including his wife’s income. But he did not include his own consulting income in the updates.

On two subsequent occasions in January the Surf City Voice asked Foley by email what specifically had led him to believe that he didn’t have to report his wife’s income. Foley did not respond. During a phone interview on Feb. 7 he said that he still didn’t think he had to report his wife’s income because he had no access to it. He had updated his disclosure forms only for appearance’s sake, he said.

If Foley and his wife had signed a valid prenuptial agreement stipulating the separation of their property, there would have been no conflict of interest or requirement to report the income. He had never mentioned such an agreement before, and when asked the next day if such an agreement existed, he said no.

Then on Feb. 27 the Voice of OC reported that from 2007 to 2010 Foley had voted to approve three contracts—over $9 million worth—with engineering firms that had paid his wife over $20,000 for consulting.

The Voice of OC report also estimated that – including income from his wife’s consulting work for private firms – Foley had failed to report at least $640,000 of income prior to revising his 700 forms.

In that report, Foley reversed course and asserted that he and his wife did have a prenuptial agreement to keep their income separate.

But the Voice of OC noted that Foley had revised his 700 forms as if he had a share his wife’s income, indicated by filling in the part of the form that asks to “Identify … your pro rata share of the gross income to the entity (trust).”

In the same Voice of OC report Foley claimed that his prenuptial agreement also freed him to vote on the contracts.

The next day Foley made a public statement while chairing the MWD’s Executive Committee in Los Angeles, far from the view of the MWDOC ratepayers he represents. He and his wife have an agreement, he said again, which led them to believe that her income wasn’t reportable.

“It was further our understanding,” he added, “that Mary Jane would never work for any agency that had any connection with Metropolitan (MWD). I now realize that it would have been better for me to have abstained from votes pertaining to contracts between Metropolitan and firms that Mary Jane may have consulted with and I plan to do so in the future.”

Foley did not make a statement to the MWDOC board despite an invitation by Chairman Jeffrey Thomas to do so.

And, so far, Foley hasn’t responded to requests by the Voice of OC and the Surf City Voice to see the prenuptial agreement; but, if the FPPC investigates, he will be asked to show proof of it.

But even though a public official’s suspected actions turn out to be legal they aren’t necessarily ethical—a consideration that is big in the MWD’s ethics manual, which Foley and all the other MWD directors presumably have read.

MWDOC doesn’t have an ethics manual, but Chairman Thomas has invited the FPPC and legal experts to put on a workshop titled Ethics & Conflict of Interest Disclosure today (Monday, March 19) from 1:30 – 4:00 p.m. Invited public officials, not just from MWDOC, will learn how to fill out 700 forms.

Thomas explained his reasons for the workshop at a joint meeting of MWD and MWDOC directors that included Foley.

“Given a lot of us having questions on ethics and filing 700 forms and all the nonsense that goes into having to try to remember what you did and what you should report, what is reportable and non reportable, I thought what we would do is have a little mini seminar here.”

Thomas, who has since revoked his “nonsense” remark, invited members of the public to attend as well. The workshop will be held in MWDOC’s meeting room from 1:30 p.m. to 4:00 p.m.

At another meeting held last week, MWDOC Director Brett Barbre proposed that 700 forms for all MWDOC’s directors, its appointed MWD directors, and its employees, be vetted by the board to weed out any potential conflicts of interest. “I just think it’s smart for us to be proactive and as transparent as possible,” he said.

The idea will be discussed at April’s general board meeting and voted on at a subsequent meeting, the committee agreed.

Public citizens like Moshiri wish that MWDOC and the MWD would have been more proactive long ago, but they will probably appreciate even small steps in the right direction.

As Moshiri notes in her commentary, “Those endowed with the public trust have an obligation to give their constituents no cause for doubt.”

By John Earl
Surf City Voice

The chairman of the Metropolitan Water District of Southern California (MWD), John V. Foley, says that a recent Surf City Voice story, that exposed the omission of his wife’s income from years of financial disclosure statements he filed with the water agency, did him an “injustice by just making your own interpretation, which, quite frankly, is totally different than what mine is.”

The story pointed out that Foley had not reported an estimated $248,000 of income that his wife, Mary Jane Foley, was paid by various southern California water agencies for consulting work going back to 2004.

State law requires government officials to publicly disclose their relevant economic interests, including spousal income, within 30 days of assuming office and annually thereafter.  Fines of up to $5,000 can be levied by the Fair Political Practices Commission for violations.

Foley has served on the MWD as the appointed representative of the Municipal Water District of Orange County since 1989. He was chosen by the MWD to be its chairman for a second time in 2011.

In September Foley told the Voice that he was unaware that he had to report his wife’s income. But in October, after advice from MWD legal counsel, he amended is Statements of Economic Interest, which are filed on “700” forms, to include that income.

“The advice was: rather than get in a big battle over this why don’t you go ahead and report it,” Foley said in a phone interview Tuesday. “I decided for the sake of solving this, and not having it look like it has been hidden—put it in there.”

Mary Jane Foley and husband John V. Foley, MWD Chairman

Foley says that all of his wife’s consulting income goes into a separate trust fund for her children, that he has no access to it and that there is no “co-mingling” of her income with his. He and his wife have separate bank accounts, he adds, and file separate tax returns – all of which he believes exempt him from the state reporting law.

“To be extra safe, I went ahead and reported,” despite his exemption, he said. “I really to this moment think that I don’t have to report it,” he insisted.

But Foley’s interpretation of the law, however sincere, is conclusively incorrect.

Public officials must report spousal income unless they have a pre or post nuptial agreement, according to Tara Stock, a spokesperson for the Fair Political Practices Commission.

Stock would not comment on Foley’s case, but told the Voice by e-mail that “The general rule is that in order for a spouse’s income to possibly be exempt from reporting, there must be a valid prenuptial or postnuptial agreement and a separate property agreement.”

When asked if he had a prenuptial or postnuptial agreement with his wife Foley responded, “Separate tax returns, separate accounts. Yes.” But when asked again, specifically, if he had any nuptial agreements with his wife, Foley said he did not.

Even if Foley had signed a nuptial agreement with his wife, however, he would not have been required to file it with the FPPC or MWD. In fact, according to Stock, the Commission would only seek verification of such an agreement if an official complaint had been filed with her agency.

Foley said that his wife is winding down her consulting work. “In the last two years she’s done very little work and probably will close her business because she does not really want to spend that much time on that stuff anymore. She kind of hates the regulatory field.”