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As Rancho Santiago Community College District officials continue their efforts to justify and explain a deal to run technical schools with a Saudi Arabian company, a good government expert is questioning whether they are violating state laws.
Chancellor Raul Rodriguez, and other officials of the district’s foundation, say a Saudi private company — Al Khaleej Training and Education – fronted the initial costs associated with the foundation’s technical schools contract, including at least partial costs for trips to the Middle East kingdom taken by the foundation and district officials over the past year.
Here is how officials are explaining the arrangement:
The foundation and Al Khaleej for several months had been working under an informal, verbal partnership, with Al Khaleej covering airfare and hotel stays for some officials’ trips to conduct site assessments, among other costs.
This partnership was written into a non-binding memorandum of understanding signed May 12. At some point in the near future, the foundation and Al Khaleej are to form a joint venture to service the technical schools contract. The contract was awarded earlier this year by a Saudi public-private partnership called the Colleges of Excellence but only approved and signed by the district foundation in recent days.
So far, Al Khaleej has spent approximately $600,000, according to Rodriguez. The agreed upon plan was to have the foundation reimburse the company for the trips once the technical schools contract was signed, Rodriguez said.
But then on Monday, Rodriguez’s assistant Debra Gerard said the foundation wouldn’t be making any payments. Instead, the Colleges of Excellence would be paying Al Khaleej to cover those initial costs, including the trips, she said.
Gerard said she has already sent the first invoice to the Colleges of Excellence.
If for some reason the technical schools contract fell through, then the foundation still would have been on the hook to reimburse Al Khaleej, Rodriguez said.
The bottom line, according to Rodriguez, is that the trips weren’t gifts because it was always the understanding that at some point Al Khaleej would be reimbursed under the technical schools contract. He described them as working trips, and not a gift like a golf course junket for a council member paid for by a developer.
“I haven’t heard of anything like that,” said Bob Stern, co-author of the 1974 Political Reform Act, when told about the explanation.
Stern said if there was no understanding at the time of the trips for Al Khaleej to be reimbursed for the officials’ travel, then the officials would be required to report the costs as income on their publicly filed statements of economic interest, known as a Form 700.
If there was such an understanding, then the disclosure might not apply. However, Stern said at the very least the officials should attach letters to their public filings explaining the situation and seek advice from the state’s Fair Political Practices Commission (FPPC).
If the FPPC deems that the travel is reportable on the filings, then, according to Stern conflict of interest laws would prevent the officials from doing business with Al Khaleej on behalf of the district.
It’s also possible that conflict would extend to the foundation if the FPPC deems the foundation to also be a public agency subject to disclosure and conflict of interest rules, he said.
“I think these foundations need to be examined to see whether they need to be considered governmental agencies,” Stern said.
Regardless of disclosure issues, Stern disagreed with the foundation’s business approach, allowing Al Khaleej to arrange and pay for the cost of trips to Saudi Arabia before the technical schools contract was even in signed.
That arrangement makes the trips “gifts” and “perks,” and renders the foundation “beholden” to the Saudi company, he said.
“The foundation should have paid for the expenses for the officials going over there,” Stern said. “If this is a business arrangement, you don’t want to have the business your contracting with giving gifts or perks at the same time. You shouldn’t be beholden to them… they’re providing all these benefits to the people making the decision.”
Questions about the trips to Saudi Arabia first arose when Barry Resnick, president of the district faculty association, penned an op-ed for Voice of OC calling out the trips as a possible quid-pro-quo between a Saudi entity and district leaders.
Members of the faculty association and others have been harshly critical of the consulting deal, citing Saudi Arabia’s abysmal human rights record.
At first, the foundation approved the deal in secret, violating the state’s open meetings law. Foundation board members later were forced to reapprove the agreement at a public meeting in May, and cast a second approval vote in public last week.
Among the officials that have traveled to Saudi Arabia are Rodriguez, foundation executive director and district vice chancellor Enrique Perez, and district media center director Dr. Gustavo Chamorro.
Rodriguez traveled to Saudi Arabia in 2014, but the trip was entirely paid for by the foundation, he said.
At first, a Voice of OC review of travel expense reimbursement claims didn’t find one submitted for Rodriguez’s trip to the country. But later, Gerard sent a Voice of OC reporter a copy of the claim showing that the foundation reimbursed Rodriguez nearly $7,400 for the trip, including the cost of airfare, airport parking hotels and meals.
The small foundation and its 14-member board were formed to raise money for the district. Rodriguez said he and other and foundation officials saw the Saudi deal as a unique opportunity to raise money for the students who attend Santa Ana College and Santiago Canyon College, the two community colleges served by the district.
The three-year, $60 million contract is expected to bring in $2 million in extra revenue for the district, according to Rodriguez. “It’s going to help us fill some gaps,” he said.
On Monday, several college students from around the state showed up at the district’s regular board meeting to protest the deal with Saudi Arabia, a country that they say discriminates against people based on their sexual persuasion, religion and gender, and emphasizing again that the deal was previously done in secret.
“I can see why as a board you would be concerned about sharing this shady deal with the public,” said Mara Javins, a student with Antelope Valley College.
In an interview last week, Rodriguez defended the foundation’s relationship with Saudi Arabia. He said there are “seeds of change” in the country, and that technical schools contract allows for the introduction of western values to the ultraconservative kingdom.
“We’re not trying to reform Saudi Arabia, just trying to improve the situation there,” Rodriguez said, adding that the foundation can help “in our own small way, move that change along.”
Rodriguez said he was at first against entering into the deal, given the foundation’s lack of resources and experience, but decided later it was a good idea after his friend and business associate John Robertson introduced him to Al Khaleej. The foundation could leverage Al Khaleej’s existing resources in Saudi Arabia to help with the consulting work, he said.
At Monday’s meeting and last week’s foundation board meeting, foundation attorney Robert Feldhake also defended the contract and officials’ Saudi trips, asserting that the trips aren’t reportable on statements of economic interest because the travel was undertaken to provide services to the foundation.
It also isn’t reportable on another disclosure form specifically for payments to public agencies to compensate for travel because the foundation is a nonprofit, not a public agency, Feldhake said. He added that the foundation would be seeking advice on disclosure issues and whether the foundation is a public agency from the FPPC.
Stern disagreed, saying that if a company pays for the trips, it’s reportable income.
“It doesn’t matter that the company was doing business with the foundation,” Stern said. “They probably misunderstood, but they misunderstood.”