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Thursday, February 24, 2011 | In September of 2006, Santa Ana City Council passed one of Orange County’s strictest ordinances having to do with the containment of shopping carts. The ordinance requires merchants to come up with physical measures to corral their carts and specifically mentions electronic locking devices as one of the favored methods.
Mayor Miguel Pulido joined the council’s unanimous approval of the ordinance even though at the time he was receiving a paycheck from a company owned by R.J. Brandes, who also happened to be — and still is — majority owner of Gatekeeper Systems, Inc., an Irvine-based company that makes wheel locking systems for shopping carts.
It is unclear to good government experts whether Pulido violated the state’s conflict of interest law by participating in this vote. But it does show once again how close the mayor’s myriad business interests sometimes get to his public policy decisions.
Pulido said he believes there was “no conflict whatsoever” because he didn’t vote on a contract between the city and Gatekeeper Systems. “I only voted for this because of the need to benefit the community and because I had no conflict,” Pulido said.
The issue isn’t so cut and dried for Bob Stern, president of the Los Angeles-based Center for Governmental Studies. It is something, he said, that doesn’t have a clear answer.
“It’s complicated, let me put it that way, it’s not an easy yes there is a conflict,” Stern said.
What Is and Isn’t a Conflict of Interest
Generally, the state’s conflict of interest law bars an elected official from voting on decisions that would substantially benefit companies the official has an economic interest in.
And Fair Political Practices Commissions regulations state a public official has an economic interest in a company the official has received income from — and any related company where there is shared management or ownership.
Pulido has not received income from Gatekeeper Systems, according to financial disclosure statements. However, in 2006, the year of the shopping cart vote, he was paid as a consultant for Hydrogen Capital, another Brandes firm.
There is also a test for elected officials to determine whether they should participate in a vote where a company the official has an economic interest in might indirectly benefit.
Depending on the size of the company, a public official needs to abstain on a vote when it is “reasonably foreseeable” that the issue being voted on could result in a financial benefit to the company, according to state law.
According to the regulations, if a company received a net income over $2.5 million in the most recent fiscal year but isn’t on the Fortune 500 list or listed on the New York Stock Exchange — and the government decision might result in $500,000 or more in revenue to the company — the official needs to abstain.
In a Voice of OC check of ten merchants in the city, five had implemented the electronic wheel locks. Of those five, four had bought devices made by Gatekeeper Systems, Inc.
When the devices are bought, an entire system is installed underground to trigger the wheel locks when the carts veer too far from the merchant’s storefront. Larger merchants pay up to $50,000 for one system, depending on the size of the parking lot perimeter, according to the Pittsburgh Post-Gazzette.
Gatekeeper Systems, Inc. did not respond to phone calls seeking comment.
A Long and Lucrative Relationship
Pulido and Brandes have a business relationship that dates back at least until 2004, which is a far back as the city keeps officials’ statements of economic interests.
Most recently, it was revealed in December that the mayor was in line to receive a $500,000 finder’s fee for helping to put together a consortium of investors, including Brandes’ Belgravia Capital, to buy public buildings that former Gov. Arnold Schwarzenegger was trying to auction off.
After the arrangement was made public, Pulido said he would refuse any finder’s fee. And Gov. Jerry Brown made the issue moot earlier this month when he canceled the sale.
While that deal between Pulido and Belgravia Capital may have never materialized, others have. In 2004, the mayor received between $10,001 and $100,000 from the company, according to Pulido’s statements of economic interest he filed with the city.
Pulido’s consulting work for Hydorgen Capital lasted from 2005 through 2008, according to the statements of economic interests.
From 2008 through 2010 Pulido worked for RTP Controls, where, according to Business Week, Brandes sits on the board of directors. In 2009 and 2010, Pulido worked for Belstarr Management, LLC, a partner to Brandes’ Blenheim Equisports, which stages the riding shows at the Rancho Mission Viejo Riding Park in San Juan Capistrano.
He also received income from Belgravia Capital in 2010.
And in 2010 Pulido worked as a consultant for Caddie, an international cart-maker that is listed as the distributor for Gatekeeper Systems, Inc. throughout Russia and countries all over Europe. Pulido stated that he works for the Chinese branch, in the Jia Ding District of Shanghai.
Brandes did not respond to a phone call seeking comment.
The Part-Time Council Conundrum
What makes relationships like the one Pulido has with Brandes difficult to deal with is the fact that Pulido is a part-time councilman and needs to earn a living.
The alternative, of course, is professionalizing city councils, something most big cities have done. But that would not be an easy sell, the experts say.
“If you pay them enough, then you remove the conflict of interest. On the other hand, what it means is that you have very professional council members without other interests, ” Stern said.
County watchdog Shirley Grindle is adamantly against inflating public servants’ pay — with the exception of a small increase in the mayor’s stipend — saying that elected officials should be cautious about who they choose to work for.
“If they can’t afford to be doing the job they shouldn’t be running for office,” Grindle said.