21 Mar 2016

Time to shut Westlands down.

Time to resign, Tom?
I heard (and tweeted) that Westlands Water District had paid $125,000 in a "settlement with the Securities and Exchange Commission over accounting procedures that the SEC said exaggerated the district's ability to cover its annual debt payments."

The story goes on to say:
Westland's general manager, Thomas W. Birmingham, joked during a 2010 board meeting that the adjustments amounted to “a little Enron accounting,” a reference to the massive fraud that caused the 2001 collapse of that Houston energy and commodities company, according to the SEC.

The penalty was the largest to be levied by the SEC against a municipal bond agency. Birmingham was assessed a separate $50,000 civil penalty, and the district's former treasurer, L. David Ciapponi, received a $20,000 fine.
Now these fines are the result of illegal (and unethical) behavior (OTPR has more to say), but I want to know what happens next, especially since Westlands is a government entity [pdf]:
As defined in the California Water Code (CWC) Section 10701 (a), “local agency” means any city, county, district, agency, or other political subdivision of the state for the local performance of governmental or proprietary functions within limited boundaries. On September 8, 1952, the Fresno County Board of Supervisors declared the District formed. Westlands formed under California Water District Law (Sections 34000-37856 of the CWC) in 1952 upon petition of landowners of 400,000 acres located within the District proposed boundaries.
What I see here is a clear case of "government workers" gone wild in breaking the law to finance a losing operation.

If Westlands was a private corporation, its directors would be fined, fired and perhaps jailed. If Westlands was a private company, it would go bankrupt.

So why is this not happening to Westlands? Is it that the government (in Fresno, Sacramento or DC) does not want to punish employees who lie about finances? Is it that the government would prefer to bail out, rather than shut down, a failed project*?

Bottom Line Westlands has done a "little Enron accounting" to cover up its fraudulent fianancing of a defective business model. Time to shut down Westlands and sell its assets in bankruptcy.

H/Ts to LC and EG

* A project that has ripped off citizens and taxpayers for years for the benefit of millionaire, subsidized farmers.

1 comment:

Wayne Lusvardi said...

Having worked for two gigantic government agencies, a county government and a huge regional water wholesaler in California, I can attest that ALL government agencies don't care about the law. They care about getting their projects built or refinanced and will deal with the lawsuits and fines afterwards. Westlands is a pimple of what mainline government entities do all the time. Call it the amorality of government. Law only is enforceable agains the private sector, as demonstrated by the criminalization of Enron employees and the corporation, when afterwards California adopted the Enron model for its Cap and Trade program. Were the municipal bonds issued for the Colorado River Aqueduct an excessive risk when there weren't enough water ratepayers to pay off the bonds initially and the financing may have defaulted? In the early years the CRA was financed with property taxes. Is the corporate financing of giant concentrated solar power plants, such as Ivanpah, too excessive a risk given that we now know the plant can't produce enough energy to pay off its debts? Why did Gov. Jerry Brown and the state legislature provide fast track environmental permitting and government subsidies for such a reckless and risky venture? Ivanpah dwarfs whatever Westlands did.

Post a Comment

Note: only a member of this blog may post a comment.