Laguna Beach Official Admits Stock Conflict

City Councilwoman Lida Lenney acknowledged Friday that she voted in June to grant a rate increase to the city’s residential trash hauler while she and her husband owned stock in the firm’s parent company.

The California Political Reform Act bars a public official from influencing a government decision “in which he knows or has reason to know he has a financial interest.” Violations can result in fines of up to $2,000 per infraction.

A representative of the state Fair Political Practices Commission confirmed Friday that Lenney should have abstained from voting on a 4% rate increase given to Dewey’s Rubbish Service when the City Council unanimously approved its 1991-92 budget.

According to Lenney’s most recent state-required economic disclosure form, she and her husband own stock valued at more than $10,000 in Waste Management Inc., the nation’s largest trash hauler and owner of Dewey’s.

“It’s a conflict of interest if she voted on an issue that has a direct economic impact on a firm the city does business with,” FPPC spokeswoman Jeanette Turvill said.

Lenney said in a telephone interview that she was not aware that Dewey’s was owned by Waste Management when her husband bought 1,000 shares of the parent company about 18 months ago.

“I take responsibility; I’m supposed to know these things,” Lenney said. “But at no time did it occur to me that we owned stock in a business that the city does business with.”

George Lenney, the councilwoman’s husband, said he was also not aware that the two firms were related when he bought Waste Management shares on the advice of his stockbroker.

He said he has never been in contact with a representative of either firm and that he is considering selling the stock.

David Ross, general manager of Dewey’s in Irvine, could not be reached for comment.

The councilwoman’s financial disclosure form also states that the Lenneys hold other investments that include stock valued at more than $10,000 in Browning Ferris Industries, the nation’s second-largest trash company, and telecommunications giant General Telephone.

“George is the person in our family that buys and sells the stock,” Lenney said. “But this is something I definitely should have been paying attention to. It has to do with my level of awareness. . . . I’ll definitely be abstaining on votes concerning Dewey’s from now on.”

The June vote approving the rate increase was part of a package of budget measures. City officials estimated the annual value of the Dewey’s trash contract at about $700,000.

The council also authorized its staff to start a commercial recycling program that could prove valuable to the waste hauler. City officials declined to estimate the worth of the additional recycling program, saying plans were still under negotiation with Dewey’s.

City Councilman Neil G. Fitzpatrick said it would have been “prudent” for Lenney to have abstained from the budget vote.

“I hate to pass judgment,” he said, “but if I had been in that situation, I would have abstained.”

But Fitzpatrick said he also did not know that Dewey’s is owned by Waste Management. “I wasn’t too cognizant of that, either,” he said. “I think it was an honest mistake on (Lenney’s) part.”

Councilwoman Ann Cristoph said she believes that Lenney was unaware of Dewey’s connection with Waste Management.

“It’s unfortunate that she couldn’t catch that,” Cristoph said. “But it’s always possible that something like that can slip through. You just try the best you can to catch these things.”

Lenney, a strong environmentalist who has taken active roles in preserving Laguna Canyon and trying to halt the San Joaquin Hills tollway, said she sees no irony in owning shares in the nation’s two largest waste companies.

Waste Management in particular has been at odds with several environmental groups across the nation, including Greenpeace, which compiled a report in 1991 attacking the hauler’s ecological record.

In March, the company was also assailed by the San Diego district attorney’s office, which released a 58-page report noting that the firm has accumulated $50 million in fines nationally for environmental transgressions in the last decade.

“My husband’s financial dealings, his investments, that’s part of his life,” Lenney said. “I really don’t think of myself as owning it, although I’m aware that we both do under the community property laws.

“I trust his judgment,” she continued. “He would not knowingly invest in a company that’s polluting.”

While city officials say Dewey’s has done a good job in Laguna Beach, several local environmentalists called for the council to look into Waste Management’s record.

“I think it should be discussed at the council level,” said Norman Grossman, a city planning commissioner and board member of Laguna Greenbelt, a local environmental group.

“This city gets involved against so many environmental enemies,” he said, “it would be wrong to do business with one of them.”