High-Speed Rail

California’s top high-speed rail consultant suspended amid state ethics review

The top consultant on California high-speed rail has been suspended after a state watchdog agency began reviewing his approval of a multimillion-dollar contract for a company in which he had heavily invested, the Los Angeles Times has learned.

Roy Hill, deputy chief operating officer for the California High-Speed Rail Authority and a senior executive at the lead consulting firm WSP, signed a $51 million change order for the construction team led by the Spanish firm Dragados. It happened in the same year he may have owned more than $100,000 of stock in Jacobs Engineering, which is part of the Dragados team, records show.

Assemblyman Jim Patterson, R-Fresno, a longtime critic of the rail project, requested the state Fair Political Practices Commission last week to launch an investigation into Hill’s actions and holdings. On Monday afternoon, WSP suspended Hill at the direction of the rail authority, pending the outcome of the FPPC review , according to WSP and rail authority officials. The rail authority also sent an internal email about the suspension to the agency’s staff.

On Tuesday, the rail authority began an internal assessment of Hill’s actions, as well. The FPPC has up to 28 days to decide whether to launch a formal investigation.

The FPPC review could be another setback to the rail system, coming soon after Gov. Gavin Newsom pledged greater transparency for the project and installed his political ally Lenny Mendonca as chairman of the rail authority board.

“The authority takes conflict-of-interest concerns very seriously and will work closely with the FPPC on the allegations in question,” agency spokeswoman Annie Parker said.

Denise Turner Roth, chief development officer for WSP USA, said in a statement: “We hold ourselves to the highest ethical standards. We take these allegations seriously, and will cooperate fully with the investigation. Mr. Hill has been temporarily suspended while this matter is reviewed.”

Patterson asked for investigation

Patterson, who asked for the probe, requested financial disclosure forms of consultants working on the project after The Times published an article about the project’s over-reliance on consultants.

“This calls into question just how deep and just how corrupt this project has become,” Patterson said. “My office has heard from former High-Speed Rail Authority employees and even former contractors who are disgusted by what they believe is corrupt behavior. Unfortunately, the High-Speed Rail Authority doesn’t do the right thing until they’re caught red-handed.”

Dragados and its subsidiary Flatiron won the contract to build 65 miles of rail bed, viaducts and bridges in Kings County for a bid of $1.2 billion in December 2014. The work has encountered substantial delays since then.

The change order was signed Dec. 20, 2017, by Hill, along with chief engineer Scott Jarvis and then-acting Chief Executive Thomas Fellenz. It compensated the Dragados team for delays involving delivery of land, permits, utility relocations and other factors through Aug. 31, 2017. It left open the possibility of further delay claims from that point.

Hill came onto the project in June 2017, a month after the former Parsons Brinckerhoff engineering firm became known as WSP. On March 18 of this year, he filed a financial disclosure statement, known as a California Form 700, that showed he held between $100,000 and $1 million worth of stock in Jacobs Engineering, the Texas firm that is providing engineering and design services to the Dragados joint venture. Hill did not fill in sections of the form that indicated when he acquired or may have disposed of the stock.

Hill may have acquired the Jacobs shares through a merger, in which Jacobs acquired engineering and environmental management firm CH2M, based in Colorado.

Before joining WSP, Hill was a longtime senior executive at CH2M in Europe, where he worked on a broad range of infrastructure projects, according to his resume. It is unclear from his disclosure form whether he owned the Jacobs stock before the merger.

The acquisition was announced Aug. 2, 2017, and completed Dec. 18, 2017. If Hill held CH2M stock, he probably knew he would own the Jacobs shares before he signed the contract modification but did not actually own them until months after he signed the document. The acquisition terms were extremely favorable to CH2M shareholders, and media accounts at the time said executives at the company would benefit substantially.

Not the first issue for Hill

Hill was no stranger to controversy in Europe during his time at CH2M.

From 2011 to 2014, Hill was director of Britain’s ambitious bullet train project, High Speed 2, while on loan form CH2M. He then in 2016 returned as interim chief amid allegations of conflict of interest, according to multiple British news accounts at the time.

When CH2M won a major design contract for the system, a rival bidder, Mace, filed a protest that asserted CH2M had a conflict of interest because Hill and his successor, Mark Thurston, were both CH2M employees. As a result, CH2M withdrew from the contract.

Ethics experts say such issues are often not black and white. An ethics issue begins if there is a “conflict producing interest” but requires that the conflict was foreseeable and that it is material or significant, according to Delaney Marsco, ethics counsel at Campaign Legal Center, a nonpartisan watchdog with a large legal staff that aims to hold public officials accountable.

Marsco, who has been involved in California ethics issues, said consultants are treated the same as any state employee in ethics compliance. A conflict producing interest could be a piece of property or ownership of stock. Whether a conflict is foreseeable depends on whether a decision will affect a person’s financial interests and material whether it is valuable enough to influence a decision.

“It is hard to know how much an official knows about whether the stock value will change,” she said.

The factors include such arcane issues as what percentage of a company’s business is tied up in a contract and whether it is a realistic possibility that an action would affect the value of a person’s financial interest, Marsco said. But rules are also guided by the appearance of a conflict of interest.

“Even the appearance of conflict undermines public trust and appears corrupt,” she said. “If it is in the best interest of the project, then it is your duty to recuse yourself from decisions.”

Patterson keeps heat on

Patterson’s request for an investigation of Hill goes beyond the Jacobs stock ownership. Patterson contends that the rail authority has created conflicts of interest by putting Hill and other consultants in a position of managing state employees, when the opposite leadership structure should be expected.

In October 2018, the rail authority issued a lengthy report on its management structure, touting its integrated approach with WSP, known as its rail delivery partner. It details WSP’s role as including “managing program implementation, strategy development and policy formulation; and providing the staffing and resources necessary for program and headquarters project management.”

“We never would have considered in Fresno doing what high-speed rail is doing with these consultants and contractors,” said Patterson, who was Fresno mayor before moving to the Assembly. “This is considered so outside anything that is appropriate ethical behavior.”

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