ORANGE COUNTY PERSPECTIVE : A Lot of Interest in the Lack of Interest
The San Juan Capistrano City Council has taken the first step toward cleaning up a mess of its own creation. It has agreed to hire an independent consultant to conduct an audit and legal review of the $398,235 in loans the council made over the last nine years to City Manager Stephen B. Julian. Done well, the consultant’s report should help clarify the circumstances under which Julian was loaned the money and the exact terms of repayment.
So far, there have been incomplete answers to many questions, including why certain loans were made, how the loans were approved by the council and why Julian was given no-interest loans and allowed to delay some payments. At present, Julian owes the city $85,736.75, at no interest.
For the record:
12:00 a.m. March 1, 1992 For the Record
Los Angeles Times Sunday March 1, 1992 Home Edition Part A Page 3 Column 4 Metro Desk 5 inches; 162 words Type of Material: Correction
Stephen B. Julian, city manager of San Juan Capistrano, filed a lawsuit last month against The Times and several of its employees for libel. The lawsuit claims, in part, that the articles and editorials published during January and February, 1991, accused Julian of illegal and corrupt conduct in his financial dealings with the city of San Juan Capistrano.
The Times wishes to make clear that the articles did not state and were not intended to imply that Julian is a corrupt public official. Additionally, the articles did not state, nor were they intended to imply, that Julian participated in any illegal activity or that any of the terms and conditions of his employment were illegal.
As The Times reported on March 9, 1991, the Orange County district attorney’s office declined to investigate Julian’s dealings with San Juan Capistrano, stating that it had no evidence suggesting that any crime had been committed.
Julian contends that the articles harmed him and caused him and members of his family to be the subject of harassment. The Times does not condone or encourage any harassment of Julian or his family and regrets any harm that may have occurred.
An explanation also is needed as to why Julian’s latest employment contract with the city may ultimately free him from any financial obligations with San Juan Capistrano.
The independent consultant will be selected by the council’s two newest members--Jeff Vasquez and Gil Jones--who were not involved in approving any of the loans. The council’s other three members--Gary L. Hausdorfer, Lawrence F. Buchheim and Kenneth E. Friess, who is mayor--say they have done nothing wrong. “It may be different, but it’s not bad,” Friess said of the city’s financial relationship to Julian. Julian also maintains that the loans were proper. But his accounts of the loans are confusing, and he has not helped his cause by refusing to release documents that would shed light on the transactions. Whoever is hired as the consultant should make sure that all loan agreements and other relevant records are fully disclosed.
While there is no immediate reason to expect that a review will not be thorough, an auditor will still be the council’s hired hand, and the council has much to answer for in having approved the loans in the first place. Further steps may be necessary to be sure that an assessment of the council’s handling of Julian’s loans is truly independent. At some point, it may be appropriate for the district attorney’s office to step in to see if any state laws have been violated.
Whatever the outcome of the review, it is essential that the City Council change its policies regarding personal loans to city employees. The city treasury is not a lending institution. There should be no more loans for Julian, with his extraordinary contract provision. The public interest must come first, not the convenience or personal problems of the city manager or any other employee.
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