Conflict-Law Issue : Phone-Pact Votes Called a Violation

Mayor Maureen O’Connor and two San Diego City Council members violated state conflict-of-interest laws when they voted May 30 to breathe new life into competition for a multimillion-dollar government telephone contract involving companies in which all three have financial interests, according to an opinion issued by City Atty. John Witt’s office Monday.

However, because the violation was unintentional, O’Connor and council members Abbe Wolfsheimer and Bruce Henderson will not face misdemeanor or civil penalties for violations of the state’s Political Reform Act, according to the opinion written by Deputy City Atty. Cristie C. McGuire.

Nevertheless, the opinion advised all three to disqualify themselves from future consideration or reconsideration of bids for a lucrative city government telephone contract that was the basis of the violation.

Witt said he will not turn over the matter to District Atty. Edwin Miller’s office or the state Fair Political Practices Commission. A spokeswoman for Miller said it is unlikely that the district attorney will investigate the vote without a complaint.

Stems from May 30 Vote

The decision stems from a May 30 vote in which the council accepted a recommendation from its nonprofit data-processing agency that all seven bidders for a city telephone contract valued at $12 million to $18 million be reconsidered.

The directors of the San Diego Data Processing Corp., a nonprofit agency given authority by the council in 1986 to choose a vendor for the 7,100-phone telephone system, had selected Tel Plus Communications and was prepared to begin negotiations with the company.

But, on May 16, the council intervened, threatening to disband the data-processing corporation if its officials did not accept final offers from all seven bidders and hear oral presentations from them. Henderson and O’Connor were not present for that vote, though Wolfsheimer was one of the leaders of the action.

$100,000 in Bonds

After the May 30 vote, The Times noted that O’Connor owned more than $100,000 in bonds of General Electric Capital, a subsidiary of General Electric Corp., one of the disappointed bidders for the telephone contract.

Henderson and Wolfsheimer both own stock in GTE Corp., parent company of General Telephone of California, another of the losing bidders.

Although there appears to be no chance that any of the council members could profit from the vote, state law prohibits public officials from taking actions that could have a foreseeable, financial benefit to companies in which they have investments.

On Monday, the council voted, 6 to 0, to reconsider the May 30 vote, an action demanded by O’Connor to allow her to cancel her previous vote and abstain. On Witt’s advice, O’Connor, Wolfsheimer and Henderson abstained even from Monday’s reconsideration vote. A new vote on the telephone bidding process will take place today.

“I am happy to abstain. It makes my day,” said O’Connor, who has repeatedly protested that she was vocally opposed to interfering in the Data Processing Corp.’s deliberations on the telephone contract and was out of the country for the May 16 action. Her chief of staff, Ben Dillingham, read a statement to that effect at the meeting.

Henderson also has opposed council interference in the contract decision. However, he refused to agree with Witt’s legal opinion, saying he needs more information on some of the points raised before he can determine whether he believes he violated disqualification requirements of the Political Reform Act.

Difficult to Make Call

He said the fact that the mayor and two council members unknowingly committed the same violation “clearly demonstrates how difficult it is to make that call.

“Either the council hasn’t been adequately trained about what to look for, or there’s something terribly wrong with the law,” Henderson said. He again called for some form of screening mechanism to warn council members about possible conflicts of interest, and O’Connor promised to raise the subject before the council’s Rules Committee.

An angered Wolfsheimer said during the council session: “I smell a rat in this case. I don’t know who it is, but there is one to be smelled.

“I think it’s ironic when the council acts to save the taxpayers money . . . that obstacles are thrown in our way.” She said she had not read the legal opinion carefully enough to determine whether she agrees with it.

‘Investment Interests’

In her analysis, McGuire found that O’Connor and the council members have “investment interests” in the companies, as defined by law, and that they should have known who the bidders were because they received a May 10 memo from data-processing officials listing them. Henderson and Wolfsheimer said Monday that they did not read the memo.

Wolfsheimer was cleared of any violations in her May 16 vote, but “the actions of the mayor and both council members on May 30 were attempts to influence a governmental decision . . . by exerting (their) influence on (the data-processing corporation) to reopen the bid process to all seven bidders on the telecommunications contract,” McGuire wrote.

However, the council members were acting “in good faith,” and violated the law inadvertently, McGuire also wrote.

In an unrelated matter, O’Connor and Wolfsheimer also abstained Monday on a vote awarding a city contract to provide security guards at two city office buildings, claiming that they could not determine whether they have financial interests in parent companies or subsidiaries of the firms involved.

Henderson cast a vote in the matter, which Witt said was “distinguishable’ from the telephone bid vote.