State auditor finds top aides to UC President Napolitano interfered in audit, recommends reforms

California State Auditor Elaine Howle wants University of California regents to consider disciplining university employees who repeatedly interfered with a state audit, tried to hide their actions, misled investigators and withheld requested information until threatened with court action, according to a private report by her office obtained by The Times.

Howle’s office began investigating UC interference in a state audit on the performance of UC President Janet Napolitano’s office after a whistleblower complaint early this year. Like a separate inquiry commissioned by regents whose results were released last week, Howle’s investigation determined that Napolitano approved a plan instructing the UC system’s 10 campuses to submit responses to confidential questionnaires about her office for review by her aides before sending them on to the state auditor.

Both investigations found that Napolitano’s aides asked campuses to tone down or delete criticisms. But neither found sufficient evidence that Napolitano knew her aides planned to do this. Napolitano told investigators that had she known, she would not have approved their plan.

Both reports primarily blamed Napolitano’s Chief of Staff Seth Grossman and Deputy Chief of Staff Bernie Jones for the interference. Howle’s report cited additional evidence of wrongdoing by Jones, including intentional failures at least twice to provide requested documents to the auditor and an inappropriate effort to identify the whistleblower.

These actions impeded her audit “by impairing [her] office’s statutory right to access records, failing to provide the requested documents in a timely manner, failing to provide unaltered records, and contributing to inefficiency and waste,” Howle wrote in an Oct. 26 letter to George Kieffer, chairman of the UC Board of Regents.

The Times obtained copies of the letter and the report after the state auditor sent them to legislative leaders of both parties. Howle declined to comment.

Her report outlined several recommendations to avoid future interference, including disciplining the UC employees involved, requiring training and education about whistleblowers and the inappropriateness of retaliation, and revising reporting so that university auditors report directly to regents, not to the UC president’s office.

In an interview Wednesday, Kieffer said the regents would be “working collaboratively” with Howle to implement her suggested reforms. The regents also plan to discuss their own, more detailed recommendations at their next meeting, in January.

The regents’ proposals include a ban on obstructing, interfering or coordinating requests for information in responding to any state audit. They also suggest having the general counsel, chief investment officer and top audit officers report solely to them on audits and investigations involving the UC president’s office.

Napolitano apologized for her actions last week after the regents released the findings of their investigation, which was conducted by former state Justice Carlos Moreno and the Hueston Hennigan law firm. The regents unanimously agreed to retain her as president but sharply disagreed about how to discipline her and others involved.

A majority of regents voted to reprimand Napolitano and said Grossman and Jones would have been subject to serious discipline if they had not resigned earlier in the month. A vocal minority, however, said that more serious action was needed. Lt. Gov. Gavin Newsom, an ex-officio regent, told The Times through a spokesman that a mere reprimand of Napolitano was “insignificant.” Regent John A. Pérez said a broader range of actions should be debated, including possible measures against Grossman and Jones.

Kieffer said Grossman and Jones received no severance packages or residual UC benefits. “They got zero,” he said, “There is frankly nothing more we could do to them.”

He said he would be working with Howle in coordination with Napolitano to determine whether to take any other actions against UC employees for inappropriate behavior during the audit.

Times staff writer Patrick McGreevy contributed to this report.

teresa.watanabe@latimes.com

Twitter: @teresawatanabe

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