Regulators Ignored Law on Financial Disclosures : Ethics: Top agriculture officials say they used an honor system instead of abiding by statute. But they deny any impropriety.

For years, Henry J. Voss and other top state regulators of California agriculture have ignored a requirement to report financial conflicts of interest when they disqualify themselves from taking official actions, it was learned Thursday.

Instead, Agriculture Secretary Voss and his decision-makers have adhered to an informal departmental honor system, officials said.

The failure to follow reporting rules is the latest controversy to envelop the Food and Agriculture Department. Voss’ tenure is under review by Gov. Pete Wilson amid allegations by Consumers Union that Voss violated a related set of conflict-of-interest safeguards while receiving $450,000 in income from state-regulated farm interests since he took office in 1989.

In the newest development, agriculture officials said that under the department’s little-known in-house practice, top officials--some of whom receive substantial income from agricultural enterprises--have taken it upon themselves to correctly bow out of making decisions if they have a conflict.

However, because the process is informal and depends upon an honor system, there is no paper trail left to document an official’s conflicting interest, thus breaching state disclosure requirements.

Under regulations of the Watergate-era Political Reform Act, virtually all state officials who must disqualify themselves because of a conflict must also notify their superiors, including the governor, and identify the conflicting interest in writing.

The agriculture department’s far-ranging decisions can affect the supply, distribution, quality and consumer prices for more than 250 farm products, from alfalfa to wheat.

Spokeswoman Emma Suarez said the department’s informal disqualification procedures predated Voss’ arrival in 1989 and that he merely continued a policy that had never been challenged.

But that is about to change. “We have found that as a result of the happenings of the last month or so, what we have been doing is clearly insufficient,” said Michael Chrisman, undersecretary to Voss.

Chrisman and Suarez said that because of continuing controversy the department soon will scrap its system and follow the state’s financial disclosure regulations that it has been ignoring for 16 years.

“We thought the informal process was enough,” Suarez said. “But we know now that we have to take it a step farther. . . . It’s the prudent thing to do.”

Meanwhile, Voss’ future remains uncertain. Consumers Union has cited as an alleged conflict Voss’ income as a peach grower in the San Joaquin Valley while heading a department that regulates California’s $19-billion agriculture industry.

Wilson, who reappointed Voss in 1990, is reviewing his status as a state official. Wilson has said he is unhappy with Voss’ “sloppy” attention to detail in belatedly reporting his outside income.

Sean Walsh, press secretary to Wilson, said Thursday that the Fair Political Practices Commission’s disclosure regulations are clear and “the governor expects all of his appointees to live up to the full letter and spirit of the law.”

Officials of the watchdog FPPC said this week they have no indication of officials in other state agencies failing to comply with the 16-year-old conflict regulation. Offenders can be fined $2,000 for each violation.

Commission spokeswoman Jeanette Turvill refused to discuss what action, if any, the FPPC might take against agriculture department officials. Generally, she said, it would be considered only a technical violation if a state official disqualified himself or herself from an action, but failed to disclose it in writing.

Consumers Union regional director Harry Snyder said his organization intends to ask Atty. Gen. Dan Lungren to see if any felony conflict laws have been violated by agriculture officials.

In addition to Voss, other top-level officials of the agriculture department within the last two weeks have amended their required statements of economic interest, including Deputy Director A.J. Yates, Undersecretary Chrisman and Legislative Director James Collin.

Each reported outside income from family-owned farming operations and each told The Times that he had never participated in an official action that affected his outside economic interests.

Yates, a former farmer whose financial reports disclosed about $200,000 in income from agricultural sources since 1990, said he sold all his farm properties when he became a government employee five years ago.

Chrisman, partner in a walnut and cattle ranching business near Visalia, said he received at least $40,000 last year from agriculture sources, including $10,000 from Diamond Walnut Growers. Although the state regulates walnuts, Chrisman said he has never been called upon to make a decision relating to walnuts.

Collin, the department’s chief liaison to the Legislature, reported outside income from a partnership interest in a San Joaquin Valley plum and orange farm and as a stockholder in a small winery in Lake County, including $10,000 from Sunsweet Inc., a fruit processor.

Collin said his job demands that he present accurate information to lawmakers on agricultural issues in addition to representing the Administration’s position on those matters. “If I see a conflict, I have no problem removing myself,” he said.