This story has been updated.
In 1999, the state Legislature made the Metropolitan Water District of Southern California create an ethics office. Metropolitan, the main supplier of San Diego’s water, had just been caught up in an ethically questionable public relations campaign aimed at blocking the San Diego County Water Authority from buying water from someone else.
Now, that ethics office – rather than mediating the long-running feud between the Water Authority and Metropolitan – has become another tool in the fight.
On Tuesday, Metropolitan’s board may vote to fire its ethics officer, Deena Ghaly, after she appeared to side with the Water Authority in two recent investigations.
Ghaly’s office closed one investigation that centered on whether a Water Authority representative leaked an internal Metropolitan document.
In the other investigation, Ghaly’s office said that Metropolitan’s former chief operating officer had deliberately misled the board about a water recycling project in Los Angeles that San Diego opposes.
Ghaly’s supporters worry she may be fired for challenging Metropolitan leadership. In a recent memo to the board, Ghaly claimed her office is a victim of a coordinated effort to derail its work.
“The issue is, do we have an independent ethics officer or not?” said Keith Lewinger, a Water Authority representative on Metropolitan’s board who is in the middle of the two ethics office investigations.
Ghaly’s critics claim her office’s investigation of the COO was botched. They say that’s why Ghaly is on the chopping block.
“The ethics office’s investigation was riddled with serious due process and procedural errors, which were appropriately raised to the board for its consideration and resolution,” said Debra Man, the COO Ghaly investigated who has since retired.
This is all just the latest bit of smoke from a long-burning fire: Metropolitan brings water into Southern California from Northern California and the Colorado River. San Diego is Metropolitan’s biggest customer and the Water Authority has seats on Metropolitan’s board. The two have been at bitter odds for at least a quarter century over matters large and small – everything from multibillion-dollar lawsuits and water projects to the fine print on financial filings.
The ethics office was created after Metropolitan and its allies tried to block the Water Authority from signing a deal to buy water from the Imperial Irrigation District, something that reduces San Diego’s reliance on Metropolitan water. The Legislature and others, offended by the breadth of the campaign against the deal, tried to rein in Metropolitan.
Whether the ethics office has been effective is debatable. In 2003, a state audit concluded Metropolitan had struggled to get the office up and running. Right now, just a handful of people work in the office, which is tasked with watching over an agency that has a $1.8 billion annual budget and 1,800 employees.
Metropolitan recently hired an outside law firm to review the office. That review prompted questions, first reported by the Los Angeles Times, about whether Metropolitan’s leaders were trying to strengthen the office or dismantle it. Now, the board may vote to fire Ghaly even before that review wraps up.
The two cases at the heart of the current storm both involve the San Diego County Water Authority. The bitter history and personal clashes between the Water Authority and Metropolitan inevitably colors the situation.
In fall 2015, the Water Authority was gearing up to oppose Metropolitan’s plan to give $15 million to help Los Angeles County get started on what could be one of the largest water-recycling facilities in the world.
Water Authority representatives have said it’s unclear what benefit San Diego customers would get out of the project, even though money for it would be coming from San Diego water customers. The Water Authority has long accused Los Angeles of having too much power on the Metropolitan board.
At a Nov. 9, 2015, committee meeting, Lewinger asked Man, then the COO, about a study of the Los Angeles project.
Man repeatedly talked about another study and either denied or declined to reveal having results from the study Lewinger was referring to.
What Man didn’t seem to know is that Lewinger already had a copy of the study he was trying to get her to talk about.
The next day, at a full board meeting, Lewinger dramatically dropped a 363-page report on his desk. Then, he accused Man and Metropolitan’s staff of withholding information.
Some of the information may have helped San Diego’s case against the Los Angeles project. For instance, Man had said a unit of water from the project would cost $1,700 under one scenario. The study said, under another scenario, the water would cost $2,300 a unit.
Sometimes, Water Authority board members are isolated at Metropolitan, being the loudest or even sole voices against something the rest of the board wants. But even other non-San Diego board members were taken aback by the idea that Man and agency staff had been withholding information.
Larry Dick, an Orange County representative to Metropolitan’s board, said during that board meeting that he was “personally somewhat distressed” by the incident. Even though he supported the Los Angeles project, he said the way things unfolded had temporarily dampened his enthusiasm for it.
Then, someone – possibly from the Water Authority delegation, possibly Lewinger – filed a complaint with the ethics office.
Man argues she had misunderstood the questions.
“I always strived to be honest and accurate in my communications with the Board of Directors,” she said in a statement released through her attorney. “In hindsight, some of my comments to the board in 2015 about the potential regional recycled water program were not as clear or concise as I would have liked, but I did not misrepresent any facts.”
The ethics office didn’t buy this. For instance, it wasn’t like Man had one shot – she had faced similar questions on a few different days from different board members.
In June, the ethics office produced a 500-page report. It found Man had deliberately tried to mislead the board, according to a person familiar with the inquiry. The report itself is not public.
Man’s last day at Metropolitan was a few days after the report was released, but her attorney said she had announced her retirement several months earlier and it had nothing to do with the ethics office matter.
In Man’s view, she was “completely vindicated” because the ethics office never released a final report, just a preliminary report in June.
Man’s attorney, Jim Sutton, had swung into action and challenged parts of the report, claiming Man had been denied due process rights and that the ethics office had misinterpreted Metropolitan’s own rules.
Sutton also argues that the ethics office had “materially misquoted” what Man told investigators and used that inaccurate information to reach a flawed preliminary conclusion. Now, he’s asking Metropolitan for $35,000. That’s what it cost to defend Man from what Sutton calls a “bungled investigation.”
On June 21, the ethics office backed down from its contention that Man violated a specific Metropolitan rule. But the ethics office seems to be standing by its determination that Man misled the board, even if there wasn’t a specific rule against that.
In late August, Ghaly said in a memo to the board that there are still “certain factual findings from which the Ethics Office has never wavered.”
Just as the Man investigation was beginning in late 2015, Lewinger – whose encounter with Man had prompted the ordeal – was suddenly himself the subject of an ethics office investigation. The chairman of Metropolitan’s board, Randy Record, filed a complaint with the ethics office after an internal Metropolitan document was leaked to an attorney for the San Diego Union-Tribune.
The newspaper was seeking records from Metropolitan about people who had received money from its turf rebate program, of which the Water Authority has been critical. The leaked document ended up in the hands of the newspaper’s attorney, who said it had come from a Metropolitan board member. That made Lewinger a possible leaker.
In May, the ethics office told Lewinger it had closed the investigation without making any findings about who had leaked the document.
If anyone was keeping score, it might appear to be Water Authority 2, Metropolitan 0.
Now, the hammer is coming down on the ethics office.
So the question is, did Ghaly, as leader of the ethics office, botch the Man investigation and go light on the leaker, or is she getting on the nerves of Metropolitan leadership by just doing her job?
For Lewinger, the stakes are high – he sees the investigation focused on him as a form of intimidation from the head of Metropolitan’s board after his run-in with Man.
“We’ve got to try to prevent the ethics office from being a tool for board members to go attacking other board members,” he said.
Ironically, we only know certain details of the Man investigation because of more leaks. Man’s name had been kept private until several board documents were obtained by Voice of San Diego.
Metropolitan’s general manager, Jeffrey Kightlinger, said that fresh leak may set off yet another investigation.
“Not only was that unethical behavior, whoever leaked it, it’s actually illegal and highly improper,” he said. “I’m very concerned and we’ll continue to review that matter.”
Update: Deena Ghaly, Metropolitan’s ethics officer, resigned on Tuesday morning, shortly before a board meeting where she might have been fired. In her resignation letter, Ghaly said she could not do her job given conflicts with members of the board. “Current systemic tensions are such that perhaps no one can,” she wrote. Metropolitan’s auditor, Gerald Riss, will hold the job temporarily until a full-time replacement can be found.