Thursday, December 15, 2005 | The city attorney’s expansive probe into City Hall has now turned inward to his own office after the revelation that the City Council voted to provide legal defense to its personnel director and auditor when council members unanimously approved a special benefit for the firefighters union president.

City Attorney Mike Aguirre said fresh information, including news of the indemnity and the recent discovery of 2002 e-mails, shows that current and former attorneys for the city were at least informed of the details of the controversial pension pact that is a focal point in the city’s legal and fiscal woes.

“Our office has to set the example. We cannot be at the fraud trough, pigging out on the taxpayers, and expect to be able to have any credibility,” said Aguirre, who took office in December.

Rich Snapper, the city’s personnel director, testified in Superior Court on Tuesday in the felony conflict-of-interest case against six former pension officials that the City Council voted to pay his legal fees if litigation ever arose surrounding the payment of the controversial benefit.

City officials are normally reimbursed for attorney’s fees if they’re incurred because of actions they take on the job, unless their actions are deemed fraudulent.

Snapper said in testimony that he raised concerns over the granting of the special benefit and was rebuked by a city councilman. He said he was told by former Assistant City Attorney Les Girard that if he didn’t like the benefit, he would be granted indemnity.

Nearly two years later, Girard unexpectedly hand delivered a letter to Snapper’s desk memorializing the promise.

According to the memo, which was released by Aguirre on Wednesday, the City Council voted on May 23, 2002, to “defend and indemnify” Snapper and former Auditor Ed Ryan on any matters related to the so-called “presidential leave” benefit.

The memo is dated Aug. 3, 2004 – nearly two years after the indemnity was granted and a month and a half before an investigatory report by an outside law firm was released.

The memo indicates that the City Council voted 9-to-0 in closed session to authorize the indemnification. However, the closed session report for that day released by Aguirre doesn’t indicate that any votes were taken.

The record shows that a team of city attorneys was present in the meeting, including Girard and former City Attorney Casey Gwinn.

“I have ordered that we conduct an internal investigation within the City Attorney’s Office of anyone that’s currently working here and all former city attorneys who have previously worked here, to determine what their involvement was and whether any of it was actionable,” Aguirre said.

Gwinn was forced out by term limits last year after serving two four-year terms and he now works at the District Attorney’s Office. The city currently grapples with a protracted financial crisis and is under investigation on a number of fronts due to a succession of events that happened largely on Gwinn’s watch.

That the investigation stretches into the City Attorney’s Office is natural, as many of the decisions that have led to the city’s sunken credit rating and pension problems required at least some level of legal oversight from staff. Local and federal investigators have been probing the city since early 2004.

Aguirre promised another installment to his series of interim reports and said he might take legal action if necessary. He said he hopes to take sworn depositions from officials such as Gwinn and Girard – something that would create the odd scenario of a current city attorney interrogating his predecessor.

The city attorney has launched a wide variety of investigations around City Hall – and even extending now to the county Board of Supervisors – since taking office a year ago. Some, such as his periodic reports on the pension system’s past dealings, have shed light on the focal point of the city’s legal and financial troubles. Others have been publicized upon their inception but never spoken of again, such as probes in the pension system’s 401(k)-style plan and possible conflict-of-interest violations by the City Council.

The benefit that Snapper objected to in 2002, and was later indemnified for, is now a key issue in the pre-trial hearing in District Attorney Bonnie Dumanis’ criminal conflict-of-interest case against six former city of San Diego pension trustees.

Prosecutors argue that former pension officials criminally violated state law when they voted on an agreement that increased their personal pension benefits. Firefighters union President Ron Saathoff, who is among the six defendants, was allowed to count both his union pay and city salary toward his pension as part of the deal – a benefit prosecutors say boosted his future pension by $30,000 a year.

In further testimony Wednesday, Elmer Heap, a former in-house legal advisor for the city, waffled on whether the he believed that the pension upgrades granted in the labor contracts that year were contingent upon the pension board’s agreement to relieve the city of its immediate bill.

Heap said, to his knowledge, the possibility of a conflict of interest that is now being alleged by the district attorney never came up during discussions the City Attorney’s Office had with staff members or retirement trustees. The deal appeared clean at the time, he said.

“My frame of mind is that there was arms-length, good-faith negotiating going on,” said Heap, who is now director of the city’s environmental services department.

Ryan, the former auditor, abruptly retired in 2004 as scrutiny of the city’s finances intensified. Last week he invoked his Fifth Amendment rights not to testify for fear of self-incrimination.

– Sam Hodgson contributed to this report.

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