Thursday, August 11, 2005 | Material supporting a law firm’s probe into the city’s pension dealings and financial disclosure practices was released Wednesday after Voice of San Diego and other local media filed formal requests to obtain the documents.

The City Attorney’s Office made back-up documents available to the press after a report summarizing the attorneys’ findings was found to be unsatisfactory by KPMG, who requested the city’s books and procedures be investigated before it would release the city’s audits for the 2003 fiscal year.

The hundreds of pages released Wednesday explain in detail the guts used in the firm’s report, summarizing the contents of about 29 binders filled with thousands of pages.

One assertion by Vinson & Elkins in its backup material for a section dealing with the city’s production of information pertinent to the firm’s probe stated that the city attorney had, in one instance, made “allegations that appear to be made without foundation.”

City Attorney Mike Aguirre discredited the documents as being part of a flawed report, saying “they would make good filler for cheap cigars.”

Vinson & Elkins was hired by the City Council in February 2004 with hopes that the firm would clear up questions about the city’s mounting pension deficit and the errors and omissions found in past bond disclosures and financial statements.

After KPMG said last fall that the firm’s first report, issued in September 2004, did not satisfy the auditor’s requirements, the council commissioned Vinson & Elkins again to conduct another probe, which was made public last Wednesday after the council waived the document’s confidentiality the day before.

Aguirre called the firm’s last set of findings “Whitewash Report No.2” because Vinson & Elkins’ conclusions stated that no city officials performed illegal acts whereas Aguirre has contended in reports and civil lawsuits that city and pension officials committed wrongdoing.

Paul Maco, an attorney with the Washington-based firm, disagreed. He told the council Tuesday that his investigation fulfilled the needs of the work assignment, which was drawn up by city officials and another consulting group, Chicago Partners.

Read more about Vinson & Elkins’ report here.

Vinson & Elkins has billed the city about $6 million for its investigations, which Maco said are complete, and for representing the city in the Securities and Exchange Commission’s ongoing probe into the city’s disclosure practices. Maco told the council he would no longer offer advice in the SEC case either.

The District Attorney’s Office, U.S. Attorney’s Office and FBI are also investigating the city for possible political corruption.

William Morris, a managing partner at KPMG, questioned Vinson & Elkins’ independence at Tuesday’s council meeting, but assured the city that the outside audit committee, headed by former SEC chairman Arthur Levitt, has acted in accordance with KPMG’s wishes so far.

The audit committee, which is comprised by Kroll Inc. consultants and attorneys at Willkie, Farr & Gallagher, is charged with reviewing and reconciling the accounts of Vinson & Elkins and those of the City Attorney’s Office, which are laid out in six parts.

The council allocated an additional $3 million to the audit committee and KPMG on Tuesday.

The city cannot sell or refinance bonds on the municipal market until audits are released. After KPMG eventually releases its audit for 2003, Macias, Gini & Co. will subsequently certify the city’s financial statements for fiscal years 2004 and 2005.

Please contact Evan McLaughlin directly at

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