A South Bay water district hired its new general manager without knowledge that he had reached a $250,000 settlement with a former employee who claimed he sexually harassed her several years ago.

When the Carson-based West Basin Municipal Water District hired Patrick Sheilds earlier this year, officials knew he had lost a wrongful termination lawsuit against the Inland Empire Utility Agency in 2015, and, five months later, reached a $57,500 settlement with an employee at the Irvine Ranch Water District, who sued for gender and racial discrimination.

But the sexual harassment allegations for another employee and the much larger settlement in September 2016 weren’t disclosed by Irvine Ranch, officials said.

Undisclosed settlement

On Friday, West Basin’s five-member board of elected directors was set to hold a special closed session to discuss the revelations, which the district learned from the Southern California News Group.

“We’ve obtained a copy of the documents and are doing an investigation,” said Manuel Serpa, an attorney with West Basin’s legal firm, Olivarez, Madruga, Lemieux & O’Neill. “We’re reviewing them and referring the matter to the board.”

But the discussion was postponed to Saturday at 12:30 p.m. because the district’s legal counsel obtained “new information,” attorney Steven O’Neill said Friday.

Sheilds, 58, was hired in late January for the top administrative position at the district, which supplies imported water to most of the South Bay. His base salary is $270,000, more than most city managers, superintendents and police chiefs.

West Basin hired the Roberts Consulting Group for $30,000 to search for a replacement for former General Manager Rich Nagel, who retired last July.

According to sources, Sheilds did not make the firm’s short list of candidates, but was invited for a courtesy interview by the board.

He does not have a college degree, nor experience as an associate or assistant general manager, the highest ranks below general manager. Sheilds served as executive manager of operations for five years at Irvine Ranch and held the same post at the Inland Empire Utilities Agency for eight years. Before that, he worked in the private sector for United Water Services, now Suez, operating West Basin’s Edward C. Little Water Recycling Facility in El Segundo.

Sheilds was praised for his time at the plant and his work implementing a clean-energy storage initiative at Irvine Ranch.

He was hired on a 3-2 vote, with Directors Harold Williams and Donald Dear opposed.

‘Very bothersome’

When headhunter Norm Roberts asked Irvine Ranch about complaints or settlements involving Sheilds, the agency only disclosed the discrimination lawsuit, which had been reported in the media, he said.

“That’s very bothersome to me,” Roberts said upon learning about the $250,000 sexual harassment settlement from a reporter. “It’s not that they weren’t asked.”

Roberts declined to discuss specifics about Sheilds’ qualifications, citing privileged closed session matters. So did West Basin’s attorneys and several board members.

Beth Beeman, a spokeswoman for the Irvine Ranch Water District, said General Manager Paul Cook “answered all the questions that were asked of him by Norm Roberts regarding Patrick Sheilds.”

She did not say whether that included mention of the sexual harassment allegations brought by the former employee in 2014.

According to the woman’s claim for damages, both Sheilds and Cook allegedly discriminated and retaliated against her because of her gender, age, race and religion, forcing her to go on medical leave. She also accused Sheilds of sexual harassment.

When the agreement was reached two years later, Sheilds and Cook admitted no wrongdoing and the woman resigned. The settlement stipulated a payment of $150,000 for damages, plus $25,000 to her retirement account and $75,000 for upholding a nondisclosure agreement.

Sheilds also admitted no wrongdoing in the $57,500 settlement from another employee, who alleged he made her perform menial tasks because of her gender and Asian-American ethnicity, then retaliated when she complained.

Sheilds was not placed on administrative leave during investigations of the complaints that led to both settlements, Beeman said.

It isn’t illegal to hire someone who has faced misconduct claims, unless a contract says the person won’t be hired if it occurred, said Jessica Levinson, an ethics expert and Loyola Law School professor.

“That’s not illegal, it’s just a judgment call up to the water district board,” she said.

At water districts, people with experience are often also the people who have the connections that raise potential conflicts of interest, Levinson said.

Cook was a senior manager at West Basin when it was previously merged with the Central Basin Municipal Water District.

Ethical screen

Friday’s meeting comes weeks after West Basin employees received a memo outlining an “ethical screen” put in place to bar Sheilds from participating in negotiations of the district’s $15.7 million annual contract with Suez to operate the recycling plant.

That’s because until his hiring at West Basin, Sheilds had been moonlighting as a consultant for Suez. Suez holds West Basin’s largest and most important contract. It has never been put out to bid and the board is currently considering a five-year renewal.

When West Basin announced Sheilds’ hiring, the agency mentioned his past with United Water, but not his recent consulting work.

United Water also is a major contributor the campaigns of several board members. Sheilds’ consulting firm made contributions to Director Gloria Gray’s runs for state Assembly in 2009 and 2013.

According to a copy of the Feb. 27 memo obtained by the Southern California News Group, Sheilds must recuse himself from matters of Suez’s contract and performance, and calls from Suez to the general manager must go to Assistant General Manager Shivaji Deshmukh.

“The GM is advised to avoid statements or opinions to staff, board members or the public about Suez or their operation of the recycled water facility,” the memo states.

The screen will remain in place for one year, according to Serpa. He stressed that West Basin takes potential conflicts of interest “very seriously.”

“We went over these issues exhaustively with the board and the Political Reform Act rules and how it might apply to this circumstance,” he said. “If he does not have the ability to affect a making of or amendment of the agreement, then a conflict is not established.”

Sheilds could not be reached, but he previously said he opened his consulting firm in 2008, and that he worked for Suez and other clients. He said he recently closed the firm, though his business license was listed as active Thursday on the secretary of state’s website.

Suez officials did not return phone calls, but Serpa said it terminated Sheilds’ consulting agreement on March 1, 30 days after he finished working for them, and a few days after he was hired by West Basin. He started Feb. 26.

When Sheilds was hired at Irvine Ranch in April 2013, Cook said he approved his side work, but with the understanding that he would end it after wrapping up a few projects. He did not know Sheilds continued to work as a consultant.

“Maybe I would have liked to have known, but it probably wouldn’t have caused me to make any different decision,” Cook said. “I probably would have been fine with it because it never affected his work. Patrick was truly a workhorse and we did a lot of really great things.”

Sheilds did not report the income from his consulting business on the economic interest statements he filed with the state during his time at Irvine Ranch and the Inland Empire Utility Agency, or any income or gifts.

That’s highly unusual, according to Levinson.

“Sometimes the forms are very sparse, but I don’t believe I’ve ever seen one that’s entirely blank,” she said.

As for West Basin not disclosing Sheilds’ work for Suez, Levinson said it is only unethical if it’s required of the district.

“Particularly because water districts are powerful and misunderstood and generally operate in the shadows, it’s always great to try and give the public as much transparency as is possible,” she said.