Revered Water Director Didn’t Disclose Wife’s Income

This article was first published January 31, 2012

By John Earl
Surf City Voice

John V. Foley, chairman of the Metropolitan Water District of Southern California, failed to report over $248,000 of income from his wife, Mary Jane Foley, back to 2004, records obtained by the Surf City Voice under the Public Records Act show.

California’s Political Reform Act requires government officials, including employees and consultants, to publicly disclose their relevant economic interests, often including spousal income, within 30 days of assuming office and annually thereafter.

The officials make their disclosures on a Statement of Economic Interests or “700” form with their respective agencies, after which the information goes to the county and state. The report helps to highlight potential conflicts of interest they may have with issues that come before a government decision making body.

Under the Act, water board directors are required during meetings to disclose any potential conflicts they have with agenda items and to recuse themselves from the decision making process by leaving the room (for consent calendar items they must recuse but can stay in the room).

California Government Code 1090 is even stricter than the ACT.

Recognizing the indirect as well as direct influence that public officials have on decision making, 1090 prohibits any financial conflict of interest by those officials over contracts, even if the official isn’t voting; those officials, it says, “shall not be financially interested in any contract made by them in their official capacity, or by any body or board of which they are members.”

Since 2001, public records obtained by the Voice indicate, Foley’s wife has run her own business, MJF Consulting, Inc., while being paid directly or indirectly for consulting work by water agencies throughout southern California, including the MET and the Municipal Water District of Orange County (MWDOC).

Foley, who has served on the MET since 1989, claimed that he was unaware of any obligation to report his wife’s income.

“I never felt it was required. You know, I don’t have no problem with it,” he told the Voice after a MWDOC meeting last September.

The Voice became aware of some of Foley’s missing financial disclosures after examining his 700 forms going back to 2006. But when questioned, Foley said that he had never reported his wife’s income.

But on October 25, a month after he was questioned by the Voice, Foley filed amended financial disclosures back to 2004 that include most – but not all – consulting income from his wife for each year, records show.

Foley did not respond to requests by the Voice to explain why he updated his disclosure reports and why they are still incomplete. But, according MWDOC General Manager Kevin Hunt, who was present at an interview with Foley conducted by SoCal PBS, Foley said that he had been advised by MET attorneys that it would be “more transparent” to revise his disclosures.

MET spokesperson Bob Muir refused to reveal any confidential advice given to Foley by MET legal counsel, but he did say that no disciplinary action was considered by the board for failing to comply with financial disclosure laws.

The still (partially) missing disclosures involve a three-year $125,000 contract between Byran Buck Associates (BBA) and five water agencies: the MET, MWDOC, San Diego Water Authority, West Basin Municipal Water District and the City of Long Beach Water Department.

Under the terms of the contract, which was administered by the MET, Mary Jane Foley was guaranteed a minimum amount of work as a subcontractor. She was paid $160 per hour or about $45,000 over the contract period. A total of $108,945 or $21,789 each was spent by the five agencies.

The contract was approved by the MET’s general manager, so it did not go to the board for a vote, although contracts for far less value sometimes do– a matter of the GM’s choice, according to MET regulations, when a contract is for $250,000 or less.

The BBA contract violated the law, says former Huntington Beach mayor Debbie Cook, who is also an environmental attorney. Cook has been examining the complex and often hidden operations of local water agencies and was recently interviewed as part of a PBS SoCal expose of the Santa Margarita Water District in south Orange County.

‘A Clear Violation’
Referring to the three-year contract, Cook concludes that it directly benefited long time director Jack Foley and his wife Mary Jane Foley.

“This is a clear violation of Government Code Section 1090. An agency like MWD [MET], with the kinds of resources it has available, should know better,” she wrote in an e-mail to the Voice.

Efforts to contact Chairman Foley since September have been unsuccessful, so far. But MET media spokesperson Armando Acuna, responding to inquires about the legality of Chairman Foley’s standing under 1090, told the Voice, also by e-mail, that “Metropolitan’s Legal Department represents Metropolitan and cannot give legal advice or a legal opinion to members of the public.”

The minimum estimate of $248,000 of unreported income is based on the BBA contracts as well as direct contracts between MWDOC and MJF Consulting, Inc., matched against income sources revealed in Foley’s amended 700 filings (but not including income from other, mostly private, sources that were also part of the amendment filings).

Mary Jane Foley’s work with the five water agencies involved regulatory, permitting and lobbying issues for a proposed ocean desalination plant at Dana Point and for the growth of ocean water (and brackish water) desalination plants throughout California. She is still under contract with MWDOC.

As Chairman of the MET, John Foley selects all members of all standing MET committees and appoints the chairpersons for all special committees and task forces. Before starting his second stint as chairman he headed up the MET’s Special Committee on Desalination and Recycling from its start in 2009 through 2010.

Foley regularly votes on desalination issues at the MET and discusses them at various MWDOC meetings. He is highly venerated by his peers throughout southern California and has strong Republican Party connections going back decades.

The MET casts a vast influence as a water wholesaler over all of southern California, including Ventura County, the Inland Empire, Orange County and San Diego. It delivers 1.6 billion gallons of water per day to 26 cities and water districts, including MWDOC, and to 19 million people, according to its website. MWDOC, in turn, helps manage water for its 28 water agencies and member cities in Orange County.

Foley is one of four appointees chosen by the MWDOC board of directors to represent it on the MET – and he is one of two within that group who were not elected by voters to either board.

The other unelected MET director representing MWDOC is Linda Ackerman. Her husband, Dick Ackerman, is a former California state legislator who works for Nossaman LLP, an Orange County legal and policy consulting firm under contract with MWDOC. Linda Ackerman includes that income source on her 700 forms.

A Seasoned Water Veteran
Cook is skeptical of Foley’s claim that he didn’t think he had to report. “He is a seasoned water veteran. He has received many hours of required training on avoidance of conflicts of interest, and it was common knowledge among his colleagues and MET staff that his wife’s income was derived from the same public agency [MWDOC] that he serves—shame on the entire industry that does not seem willing or able to police its own.”

Based on his impressive resume, Foley would seem anything but a novice when it comes to understanding the rules of water boarding.

He first came to the MET board of directors in 1989 as an appointee of MWDOC. He served as MET chairman from 1993 – 1998 and was elected again by that body to be chairman for a two year term starting in 2011.

From 1979 until Dec. 2007 Foley was also the General Manager of Moulton Niguel Water District in south Orange County. Moulton is one of five water agencies that make up the South Orange Coastal Ocean Desalination Project, a group that plans to build an ocean desalination plant in Dana Point—under guidance from MWDOC and with promised financial assistance from the MET.

Seven months after John Foley left Moulton his wife was warned of a potential conflict of interest with her work on the Dana Point desalination plant because her husband had been involved in that project as Moulton’s general manager. In an e-mail obtained by the Voice, Mary Jane Foley asks MWDOC’s project managers Richard Bell and Karl Seckel what she should do:

“Richard has informed me that since Jack is a signature to the participating desal group from MNWD, I will be perceived as a conflict. Richard said that South Coast will run my contract. How will this all be determined? Do I stop all work and communication with you all now?”

In this e-mail, Mary Jane Foley asks about a conflict of interest between her work and her husband’s involvement in a project. To view at full size, click this image once, then after it appears in a new window, click it again.

But Mary Jane Foley continued her consulting work with MWDOC, as well as her work as a subcontractor for Byran Buck Associates. And what could have been taken as a wake up call for her husband – to report a potential conflict of interest on his 700 forms – was overlooked, at least until after the Voice forced the issue.

If hands-on experience isn’t the best teacher, then mandatory ethics training every two years also helps water board directors in California to understand their legal and ethical obligations to the public. Chairman Foley completed ethics classes given at the MET in 2008 and 2010.

He would also have received a copy of the MET’s ethics manual for directors, which reminds its readers of two levels of ethical practice. The first is compliance with “relevant laws, rules, regulations and policies” that come with the job. The second is a “level of ethically ideal behavior in which Directors, officers and employees strive to incorporate Metropolitan’s core values in their daily work.”

That work ethic is also spelled out clearly in the MET’s Administrative Code, Section 7102, which, it might be safely assumed, was also presented to Foley for his reading. On the matter of disclosure, it says, “Directors shall comply with applicable laws regulating their conduct, including conflict of interests and financial disclosure laws.”

When the Voice asked Chairman Foley (in September) if he saw any conflict between his support of desalination projects as a MET director and his wife’s extensive work promoting desalination for MWDOC (at that time the Voice was still unaware of the BBA contract), he denied any conflict and said, contrary to public records, that she had “very little” involvement in desalination issues. “I have nothing to do with it [her work],” he added.

Foley was indifferent when asked about a vote he cast—as a director and while he was Chairman of the Special Committee on Desalination and Recycling—for the MET to join CALDESAL, a pro-desalination lobbying organization that public documents show his wife played an important role in forming while under contract with MWDOC.

“Did the MET show me as voting for it,” he asked. “Whether she was involved or not, I would have supported it,” he said, laughing.

Besides, he explained, “It’s not really a conflict of interest. You’ve got to draw a direct line to really make a point of conflict of interest.”

Foley was obliquely, whether accurately or not, comparing his own situation to legal exemptions that are made in cases where the conflict of interest is, in legal parlance, remote.

“You know, I believe in conservation,” he said, rhetorically. “Does that mean I have a conflict of interest because we voted for conservation?”