Have you noticed that the response of Mayor Dick Murphy and several members of the San Diego City Council to City Attorney Mike Aguirre's latest allegations of fraud and corruption has focused largely on the messenger—but not the message?
Last Wednesday evening, Aguirre released another investigative report, detailing how the City Council and the city's retirement-system board conspired in 2002 to further short the pension system of funding and grant increased retirement benefits the city couldn't afford in an effort to push a mandated huge balloon payment into the future, ultimately increasing the cost of the pension crisis. The report also alleged that the mayor and City Council violated federal securities laws by giving false financial information to bond investors.
The targets immediately attacked Aguirre personally, tellingly sidestepping, for the most part, the contents of the city attorney's report. Murphy hinted at a defamation lawsuit against Aguirre. Councilmember Scott Peters said he's considering filing a complaint against Aguirre with the state bar. Councilmember Jim Madaffer likened Aguirre to 1950s Communist hunter Joseph McCarthy. They all said Aguirre is harming the city and its residents. Murphy came the closest to addressing the substance of the report when he said he and the City Council were simply following the advice of former City Attorney Casey Gwinn when they signed off on seriously flawed bond prospectus documents.
We'd like to remind the mayor and the City Council that it's not Aguirre's fault the city's pension system's debt has reached into the billions of dollars. It's not Aguirre who's under investigation by the Securities and Exchange Commission, the U.S. Attorney and the FBI. It's not because of Aguirre that the city's lacking financial audits from 2003 and 2004. It's not Aguirre's fault the city can't borrow money to fund badly needed infrastructure projects. He's not the one who misled the public about the city's financial condition from late 2001 to early 2004, when rebel retirement board member Diann Shipione blew her whistle.
To divert attention to Aguirre's style and aggressive tactics is to divert attention away from the reality of the situation.
The city can't borrow money without the 2003 and 2004 audits, and the firm working on the 2003 audit, KPMG, won't finish until the city investigates possible criminal wrongdoing by its own officials. The city chose the law firm Vinson & Elkins to do the investigating, but KPMG has been critical of the depth of Vinson & Elkins' work.
That's why Aguirre's investigation-far from being harmful-is precisely what the city needs. It's likely that KPMG will be able to complete its audit, and that will make it easier for the city to borrow money for libraries, fire stations and water- and sewer-system upgrades. The response by Murphy, Peters, Madaffer and company is reflexive and ill-advised. They're going to look incredibly foolish if CityBeat is right. They already sound as if they're in denial and standing in the way of progress.
In his report's conclusion, Aguirre might have gone one step too far in saying the guilt of Murphy and the City Council is spread out along a continuum of degree, with Murphy and Peters being the most guilty, by virtue of their education and professional expertise, and Donna Frye and Toni Atkins the least guilty. He should have ended by saying their votes to approve materially false bond documents technically violated securities laws. But, in the end, the report merely represents his opinion-the final word on guilt will be the SEC's.
Our city leaders would all do well to follow Frye's advice and “calm down.”
What's more, too much attention is being paid to alleged securities violations, and not enough is being paid to the quid pro quo deal between city officials, the retirement board and the labor representatives on the board. Aguirre has the whole lot of them dead to rights on being in breach of their fiduciary duty to protect the vested right of future members of the pension system. His report includes incontrovertible evidence-minutes from closed-door meetings-showing the City Council should have known exactly what it was doing in 2002.
The mayor and City Council are doing a lot of whining about how Aguirre's not being nice. But the voters didn't elect him to be nice; they elected him because they've lost faith in city leaders. Murphy and friends should quit their whining and get out of Aguirre's way.