Cases in Point in Orange : Small scandal within larger one illustrates conflicts of cozy deals

As Orange investigates a recycling scandal in which millions are said to be missing, word comes from the city attorney’s office that the city manager apparently violated state conflict-of-interest law when he handled contract issues with the company being investigated.

According to a memo last month written by City Atty. David A. De Berry, City Manager David L. Rudat was handling contract issues with Orange’s recycling company, Orange Resource Recovery Systems Inc., after his wife sold the house of a top company official.

Rudat has said he did not think of the sale as a conflict, and his wife blames city officials for not informing her husband of the conflict-of-interest law when he took office. De Berry acknowledges that his office should have explained the law to Rudat. He also says that he does not believe the city manager intentionally violated the law.

The alleged conflict began in September 1985, about two weeks after Rudat was appointed interim city manager. At that time, his wife, Carol Rudat, sold the home of Jeffery Hambarian, a vice president of the recycling company. Because of that, the Political Reform Act required Rudat to wait a year before taking part in city actions involving the recycling company, according to the memo. The city attorney concluded that Rudat did participate in decision making with a “reasonably foreseeable financial effect on Jeff Hambarian,” the recycling executive, during the year period.

The nuances of the law should have been explained to Rudat. At the same time, common sense alone well might have prompted him to wonder about the connection between his city work and his wife’s real estate dealings.

Whatever Rudat’s degree of violation may be, the case illustrates one important reason why we have conflict-of-interest laws: perception. Here a city faces embarrassing questions about its handling of a huge recycling contract, and a question has been raised about a key city official’s relationship with a party in the probe.

This example suggests the larger need for public officials and their families to be educated up front in relevant conflict-of-interest statutes. Also, whenever there is any doubt, officials who potentially face conflicting situations should ask city counsel for guidance.

In the meantime, the city still needs to get to the bottom of the larger scandal, in which police are investigating Orange Disposal Service Inc., the city’s longtime trash hauler, and Orange Resources Recovery Systems Inc., the affiliated recycling company, for alleged misappropriation of as much as $6 million.