Sanitation Board Member Wants Swan Out

An Orange County Sanitation District board member is demanding that District Vice Chairman Peer Swan resign his leadership position because of questions about the role he played in the ongoing county bond crisis.

Irvine Councilman Barry J. Hammond on Thursday said that Swan failed “a fiduciary responsibility” in November by not alerting district members to suspected bond fund problems. Swan, acting as chairman of the Irvine Ranch Water District, had withdrawn $100 million in water district funds from the county’s troubled bond pool.

Hammond maintained that Swan should have told sanitation district board members about his concerns. “ . . . At the least he should have discussed it with the district’s legal counsel. And he didn’t do that.”

On Dec. 1, the county announced that the bond fund’s cash position had plummeted to just $300 million from $3.5 billion. The county froze the fund’s remaining assets, including $391.7 million invested by the sanitation district, and on Dec. 6, the still-evolving crisis forced the county into bankruptcy.

Swan said Thursday that he withdrew $100 million in water district funds “to try and get someone at the county to pay attention to the fund . . . not because I saw any immediate liquidity problem.” After the county agreed to review the portfolio, Swan said, “I stopped taking money out.”

Swan also said that water district bylaws permit the board to withdraw money from the county fund and invest elsewhere. In contrast, Swan said, the sanitation district traditionally invests solely through the county fund, and, in November, didn’t have the immediate option of placing its funds elsewhere.

Swan said that when county officials told him in late November that they were going to discuss the fund’s problems, “I was sworn to confidentiality.”

“I think everyone was due this explanation because I was prominently located near ground zero on this thing,” Swan said.