opinion

Our Voice: IID's ZGlobal report shows need for deeper scrutiny, oversight

The picture is getting a bit clearer when it comes to troubling potential conflicts of interest involving tens of millions of dollars in contracts made by the Imperial Irrigation District and influenced by its former high-powered consultant, ZGlobal..

The Desert Sun’s Sammy Roth has spent more than a year examining the IID-ZGlobal relationship. Last week, IID released to The Desert Sun a report by its internal investigator saying there are indeed potential problems that the utility must address in a half-dozen contracts that were influenced by the firm of consultant Ziad Alaywan.

This comes as no surprise.

IID already had canceled a $75 million power purchase deal for the Seville 3 Solar project and a $7 million contract to expand IID’s battery storage facility. Those moves came after The Desert Sun investigation found Alaywan had financial links to project partners as ZGlobal advised IID on those deals.

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The attorney for IID who investigated the relationship, Mike Aguirre, wrote in his report that the utility “must take corrective action to ensure no improper benefit is taken from a contract that arguably transgresses Section 1090.” Section 1090 is the California government code that prohibits elected officials, public employees and government consultants (like ZGlobal) from making contracts that benefit themselves.

Aguirre’s report also said there are potential ZGlobal-Alaywan conflicts of interest in other IID contracts, including:

A $12.6-million, 20-year power purchase agreement for the three-megawatt Valencia 1 solar project, and a separate agreement to connect the project to IID's grid. Alaywan helped IID make those contracts while he held a financial interest in Green Light Energy Corp., the project's developer;

An interconnection agreement for the 70-megawatt Seville 3 solar project, which was being developed by a ZGlobal client, Regenerate Power. Alaywan helped IID make that contract while he held a financial interest in a limited liability company that owned the land where the project would be built;

Several agreements between IID and Imperial Valley College related to the college's three-megawatt solar project, which was developed by Green Light and ZGlobal. Alaywan helped IID make those contracts while he held a financial interest in the LLC that owned the college's solar system.

IID is now in private mediation talks over the potential 1090 issues with ZGlobal, which ended its $9.1 million consulting contract with the utility ahead of schedule in the wake of publication of The Desert Sun investigation. Under the state law regarding conflicts of interest, IID could have chosen to void contracts and sue ZGlobal to pursue repayment.

Alaywan continues to say there was nothing improper in the relationship or consulting work with IID, which ZGlobal insists was vetted by IID counsel.

"Now, over two years later, after having sought ZGlobal's help and repeatedly assured ZGlobal of the working arrangement’s ethical propriety and legality, IID appears to be questioning whether there have been (Section 1090) violations. The unfairness is clear," Alaywan’s attorney in this matter, Eugene Iredale, wrote in a letter to Aguirre last month, some of which is reprinted in Aguirre's report.

It’s good to see IID owning up to some of the concerns that had been laid out in The Desert Sun’s ongoing examination of this business relationship. But this must not stop here.

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Aguirre’s report only covers a portion of the time that ZGlobal and IID worked together — from the commencement in October 2015 of the consulting deal. ZGlobal and IID, however, have inked contracts totaling $18 million that date back to 2005.

The entirety of this relationship should be examined. The broader Desert Sun investigation revealed concerning links in some contracts and spending decisions by IID that have benefited ZGlobal, as well as a former IID board member. At least one current IID board member, and the children of another, have also been paid to work on projects connected to ZGlobal or Alaywan.

Imperial County District Attorney Gilbert Otero has said his office is investigating, though he had to tell his assistant, Deborah Owen, to sit this one out. Her brother-in-law, Mike Abatti, is a former IID board member whose company worked with ZGlobal to build the utility’s $35 million battery. That deal and how it transpired also deserves close scrutiny.

California Attorney General Xavier Becerra should also dig into this case to ensure it is thoroughly investigated. Cancelling contracts and trying to work out a deal with ZGlobal is not enough. Serious mistakes were made in the handling of this relationship and there must be accountability.

IID General Manager Kevin Kelley has been dismissive of any concerns surrounding ZGlobal. Though he’s showed strong resolve in tough negotiations for IID that spurred Sacramento to finally begin to make good on its long-delayed promise of aiding the Salton Sea, his actions regarding ZGlobal have been disappointing.

Kelley has said that ultimately he was the one who decided to tie IID to ZGlobal. He has tough questions to answer moving forward.

Our representatives in Sacramento — Assemblymen Eduardo Garcia and Chad Mayes and Sens. Ben Hueso and Jeff Stone — should take a close look at how IID, a public agency, is governed. Giving residents of the Coachella Valley who are served by IID for their electricity needs the ability to vote for members of IID’s board — this currently is limited to Imperial County residents — would boost accountability and help keep problems like this from arising in the future.