Want the news summarized?
Subscribe to The Morning Report.
It begins like the start of a joke or a spam e-mail: How would you like to invest in a landfill in Mumbai?
But for the city of San Diego, it’s very real.
In 2007 and 2008, a San Diego city official signed at least three business deals to partner the city with an Indian solid waste company to bid on landfill projects in Mumbai, India, documents show. The agreements appear to have bound the city to provide technical support in building potential landfills in two Mumbai neighborhoods. The city official, former Deputy Chief Operating Officer Elmer Heap, also gave the company the power to act on the city’s behalf in both cases.
In return, San Diego would have received a 26 percent stake in the landfills for the deals’ first five years, according to documents obtained by voiceofsandiego.org.
The stakes were high. The city of Mumbai awarded one of the landfill contracts to a different Indian company for the equivalent of $922 million.
The agreements have sparked a worldwide chain reaction from San Diego to Mumbai. Current city leaders tell the story of a city employee gone rogue. They maintain Heap never had authorization to sign the deals and the deals never were legitimate. City Chief Operating Officer Jay Goldstone said he isn’t sure city rules allowed investments in projects like Indian landfills. City Attorney Jan Goldsmith said he has referred the case to the city auditor for review.
For his part, Heap isn’t talking. He didn’t respond to numerous requests for comment, including a visit to the law office where he now works, Kerry Steigerwalt’s Pacific Law Center. A secretary at the firm said Heap was aware of attempts to contact him.
The city laid off Heap in December 2008 during a round of budget cuts. He was making $168,000 as Goldstone’s deputy in charge of the city’s library, parks and recreation and environmental services departments. Heap also had worked as director of the Environmental Services Department, which oversees the city’s landfill, and as a deputy city attorney.
Goldstone and Goldsmith said they weren’t aware of the agreements until they received a December public records request for the information from a competing Indian company.
In February, Goldstone sent a letter to Mumbai officials revoking the agreements. The deals always were illegal, Goldsmith said, because the city’s charter requires the City Attorney’s Office to sign off on contracts and it didn’t.
“If the contracts are not signed by the city attorney they are null and void,” Goldsmith said. “That is our charter and that is the law.”
It is unclear how the city would have benefitted had the city of Mumbai awarded the contracts to the Ramky Group, the Indian company partnered with San Diego. The agreements call for the city to own 26 percent of a company that would have built the landfill. The agreements don’t specify how the city would have received a return on its investment.
It appears that Heap had committed staff time from the city’s Environmental Services Department, not money.
Both Goldstone and Goldsmith were adamant they have found no evidence of the city spending money or anyone profiting from the deal.
VOSD obtained most of the documents referenced in this story from an Indian company, Antony Waste. Some of the same documents were also on file with the city. Heap’s signature is on nine documents related to the landfill projects obtained by VOSD. The city has copies of two of them, and has not verified the authenticity of the others.
Documents show Antony Waste won the $922 million contract to build and operate the landfill from the city of Mumbai last year.
Ramky Group, San Diego’s partner, filed suit in Indian courts against Antony Waste and Mumbai, saying its bid was improperly denied.
Antony Waste is arguing Ramky Group never should have qualified to bid because it couldn’t have a valid agreement with the city of San Diego.
Devendra Mehta, Antony Waste’s chief financial officer, questioned how Heap could sign the documents on behalf of the city.
“I would say the environmental services director of the city, he’s a senior guy,” Mehta said in an interview. “He’s not a low-level guy. He should have known not to sign the documents.”
In the documents Antony Waste provided, Heap wrote that the city’s Environmental Services Department would provide technical support for Ramky Group’s bid.
“I have satisfied myself regarding the role of my department as member providing expertise and advice as specified in the bid,” a September 2007 letter with Heap’s signature said. “If the consortium is awarded the contract, my staff will review and comment (o)n deliverables based on our many years of experience in solid waste management. I agree and undertake to direct my staff to provide this technical expertise in this manner.”
It is unclear how Heap’s relationship with Ramky Group began.
He does have a history with the city where Ramky Group is headquartered: Hyderabad, India. Newspaper articles, transcripts and videos show that Heap spent four weeks in India in 2005 as part of what he described as a federal grant project to help Hyderabad build India’s first landfill.
An Indian newspaper published a picture of Heap signing an agreement with an official from Hyderabad for San Diego’s help in improving Hyderabad’s solid waste collection. In October 2005, San Diego’s City Council approved a $150,000 state grant to exchange information with Hyderabad.
“It was a remarkable experience for one to be in that amazing country to learn from these people,” Heap said at a 2006 conference at the University of California, San Diego. “I will never be the same.”
These sources all reference San Diego’s deals with Hyderabad and do not mention Ramky Group.
Goldstone said he didn’t know how Heap got involved with the company. Goldstone said Heap approached him in 2007 and said a company was interested in partnering with the city. Goldstone said he asked Heap for more information but didn’t recall if he received an update or if Heap dropped the issue.
Had he supported any deal with Ramky Group, Goldstone said he would have received approval from the City Attorney’s Office and potentially City Council depending on the deal’s terms. Also, Goldstone said he, not Heap, would have signed any agreement before it was executed.
“Obviously none of those things happened,” Goldstone said.
City officials had at least one opportunity to find out about the agreements with Ramky Group before they say they did.
In May 2008, Mayor Jerry Sanders’ general e-mail account received a message from someone who said he was a Mumbai city official. The official asked if the city had partnered with Ramky Group and if Heap was authorized to sign agreements with Ramky Group. The e-mail was forwarded to Heap, but it is unclear if he responded.
Goldstone and Goldsmith both said they didn’t know about the e-mail until VOSD requested it. Both said Heap should have told them about it.
The city, they said, already was strengthening its internal controls that could catch these types of incidents.
“As you probably understand, no internal control is 100 percent foolproof if somebody is going to sign something and not follow procedures,” Goldstone said.
Goldsmith pointed to an opinion he authored in December outlining procedures for approving city contracts. He would not comment on the city’s liability due to the agreements.
Goldsmith referred the issue to City Auditor Eduardo Luna, who said he planned to review the case with his fraud investigators.