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Pasadena Inc.
Do potential conflicts exist for Mayor Bill Bogaard and his financially well-oiled City Council colleagues?
By Joe Piasecki
In his role as mayor of Pasadena, Bill Bogaard is an affable guy who seems able to get along with anyone, an extraordinary asset in governing a city this diverse.
Though not quite an everyman figure, Bogaard appears at the ready to hear the concerns of regular Joes. Nor is he an extravagant guy, having driven the same compact sport utility vehicle for the entirety of his three terms as the city's first elected mayor in decades (and arguably the most popular one of all time).
Like all public figures, Bogaard has a private life as well, and part of his involves playing the role of major Wall Street investor.
Maybe not much of a surprise at a time when corporations hold more political, social and economic influence than ever over the way most of us live our lives — but important for that very reason — is that the mayor holds millions of dollars worth of stock in some of the nation's largest and most influential businesses, and that other Pasadena City Council members are major corporate investors as well.
A business law attorney who engineered the merger between First Interstate and Wells Fargo banks, Bogaard currently has holdings in so many different companies that whatever you do in the course of a day — from buying gasoline or groceries to making a phone call, cashing a check or even using the bathroom — chances are you've used a product or service he has a stake in.
In order to protect the public against conflicts of interest, the law requires City Council members and other public officials to report in painstaking detail what contributions they receive toward their election campaigns.
For the same reason, they must disclose each year their income, investments and real estate holdings and that of their spouses through California Fair Political Practices Commission Form 700.
City Council members were required to file this document, also known as a Statement of Economic Interests, on April 2. The form does not specify exactly how much an investment or property is worth, but asks respondents to identify each holding within a somewhat broad range of values.
The form is also a tool to help office-holders abide by conflict-of-interest rules, said Bob Stern, president of the Los Angeles-based Center for Governmental Studies. “It's a reminder to the public official of what they own and what to watch out for,” he said. “Also, you know what you put down is in public record and people are looking at that.”
For what it's worth to us, the paperwork reveals that Bogaard and Councilman Sid Tyler are the council's top stock market investors, with most of their money in Fortune 500 companies.
As it turns out, the two also own stock in 17 of the same businesses, out of Bogaard's 63 and Tyler's 51, including investments in Exxon Mobil, General Electric, IBM, Microsoft and Home Depot.
Among council members, Tyler, a former health care executive, appears to own the heftiest portfolio, with 44 separate stock holdings of $100,001 to $1 million each, making its net worth $4.4 million, at an absolute minimum.
Much of his investment is in medical and pharmaceutical companies, including Pfizer (makers of Zoloft, Xanax and Viagra) and lesser-known makers of biopharmaceuticals and anti-AIDS drugs.
Tyler also owns $100,000-plus interests in PepsiCo, the Goldman Sachs Group, student loan providers Sallie Mae, pension managers State Street and Western Union.
Council members who listed no stock holdings at all include labor union attorney Victor Gordo, La Salle High School teacher Steve Haderlein, real estate consulting firm owner Chris Holden and California Teachers Association consultant Jacque Robinson.
The Bogaard Fortune 63
According to his Form 700 filing, Bogaard holds $100,001 to $1,000,000 worth of stock in 18 companies: Chevron, Exxon Mobil, Federal Express, Wells Fargo, IBM, Microsoft, JP Morgan Chase, Washington Mutual, insurance brokers AIG (American International Group), Whole Foods Markets, COSTCO Wholesale Corp., Lowe's, General Electric (which also owns NBC-Universal), Union Pacific, the Robert Half International temporary labor agency, Carnival Cruise Lines, United Technologies Corp. and American Standard (best known for its toilets and plumbing fixtures).
Bogaard, who said he relies on professional money managers to make investment decisions, also holds $10,001 to $100,000 in stock in 42 other companies:
In household goods, Bogaard's interests include Nestlé, Wal-Mart, Walgreen's, Williams-Sonoma and Unilever — makers of Lipton beverages, Wish-Bone salad dressing, SlimFast, Country Crock butter, Dove and Ponds soaps, Bertolli pasta, Vaseline and the hyper-sexualized AXE brand deodorant.
Bogaard's filings also reveal tech stock holdings the likes of Hewlett-Packard, CISCO Systems, Adobe and Intel; a piece of Southwest Airlines; engineering and military-industrial complex titans General Dynamics, United Technologies and Fluor Corp.; media giants Disney and Time Warner; oil driller Baker Hughes; automaker DaimlerChrysler; electronics and videogame maker Sony; Wellpoint (better known in California as Blue Cross and Blue Cross–Blue Shield); Johnson & Johnson; Avon Products; even McDonald's.
If you use a phone, chances are you're remotely connected to Bogaard's portfolio — that is if you use Sprint-Nextel, Verizon or AT&T.
Bogaard is also cashing dividend checks from Bank of America, East-West Bancorp, Citigroup, HSBC Holdings, Morgan Stanley, US Bancorp and Countrywide Financial.
Conflicts big and small
Why is all of this information important, or even relevant?
For one thing, Bogaard will be asked in October to vote on whether Verizon Wireless can install a controversial cell phone tower on an otherwise undeveloped hillside owned by the Hillsides Home for Children.
Is this a conflict of interest because of Bogaard's stock holdings? Possibly, but according to the law unlikely, said Stern. Fair Political Practices Commission rules take into account what impact a public official's action could have to a company he's invested in, Stern explained, and in a case such as this, one cell phone tower affecting coverage in a small part of the city would probably not have enough impact on the company or its stock to trigger concern.
When determining whether a conflict exists, “It depends on what the company is and how much the impact is on the company. My guess is [this instance] is probably not enough to disqualify a person from voting,” he said.
“My plan would be when this matter comes to us for a decision to talk to the city attorney and look at the statements and what the regulations are,” said Bogaard, who emphasized his support for public disclosure requirements.
Other examples of muddy, chance or infinitesimal government-corporate conflicts exist.
McDonald's, although they saw no profit other than a promotional opportunity, sponsored Pasadena's Lunar New Year parade in February, an event Bogaard voted to approve and later attended to deliver a proclamation from Gov. Arnold Schwarzenegger.
Newly elected Councilwoman Margaret McAustin might have experienced a conflict of interest this year had she not in April 2006 sold her $10,000-plus stock investment in Avery Dennison Corp. — the company that is funding the controversial Rose Parade float celebrating the Summer Olympics in China, a subject of heated discussion at council meetings.
And when it comes to investments in household goods, it's conceivable that City Hall (and most taxpayers) would find it nearly impossible to avoid purchasing things from companies that city leaders have a stake in, though according to Stern it would take more than a truckload of most types of goods before one could even assume a measurable benefit for a Fortune 500 company.
Rather than haggle about relative values of goods, “Anytime a product or service is being contracted with the city and is up for a vote at the council, whether large or small, I recuse myself. I don't know how many times I've done it in the last 10 years, but quite a number,” said Tyler.
Too close to home
While there's no crime in being rich, the sheer number of business investments pursued by council members has created conflicts of interest in the past which have caused them to refrain from voting on issues.
“Probably the biggest one,” said Tyler of his own experiences, “was that I happened to have a few shares of General Electric, and GE was the provider of the combustion turbines we were purchasing for the power plant at almost $100 million.”
Bogaard also refrained from that vote due to his GE holdings, he said.
Before joining the council, then-Planning Commissioner McAustin had to refrain from voting a couple times due to her investments, she said, including a limited partnership in Barnard Foothill, an office-space and self-storage provider with a facility on East Foothill Boulevard in Pasadena that was seeking to expand.
“We're invested in our communities in more ways than one,” said McAustin of city leaders who, like her, also have business interests in the city. “Anytime there's even the faintest chance there could be a conflict of interest, the standard in Pasadena is to avoid even the appearance of impropriety. Better safe than sorry.”
By far, the council member who keeps his money closest to home, where conflict of interest issues would most often occur, is Councilman Steve Madison.
A limited partnership interest in the Dona Rosa restaurant on South Arroyo Parkway has already resulted in Madison having to recuse himself while the council voted on making improvements to the area.
Madison is also heavily invested as a limited partner in the Athenaeum Fund — described on its Web site as a venture capital firm that invests in growing local technology companies — named after Caltech's Athenaeum building, where the idea for the company was first hatched.
Athenaeum Fund Investments include Viosense, a Pasadena-based company involved in sensor technologies developed at Caltech and JPL.
Under the subhead “Local resources for entrepreneurs,” The Athenaeum Fund Web site actually links to an Economic Development page on the city's own Web site.
Hearts and wallets
People often say “Put your money where your mouth is,” so is it also fair to assume a person's investment choices open something of a window to their positions on broader political issues?
For instance, as members of religious groups persecuted by the Chinese government addressed the City Council about their concerns regarding a float in the Rose Parade promoting Beijing's upcoming Summer Games, it seemed that council members who engage more in free market capitalism were less prepared to criticize this corporate-funded effort at cultural exchange.
Bogaard, who extended sympathy for any victims of human rights abuse, has nonetheless also expressed the view that economic interests and international ties often create opportunities for a better quality of life for people around the world. More inclined to question the float were Gordo and Holden, whose investments are in local property — though discussion was unanimously referred to the city's Human Relations Commission.
Perhaps another example of investments offering some clue to a person's world views occurred in March 2003, when the council was asked to consider drafting a resolution against the war in Iraq. Tyler and Bogaard are the only council members currently invested in defense contractors and Big Oil, and back then both voted to defeat an anti-Iraq War resolution in March 2003 (It went down 3-3, with Holden abstaining, former Councilwoman Joyce Streator customarily absent and Haderlein joining in opposition).
While no one has suggested that either Bogaard or Tyler decided war wasn't an actionable city issue with any self-interest in mind, it's fair to say neither will end up registering for the Green or Peace and Freedom parties anytime soon.
Likewise, Tyler probably isn't looking for the approval of animal rights groups, as he is invested in Covance Inc. — which openly conducts drug testing on animals, and a few years ago battled in court with PETA after activists alleged brutal treatment of primates at one of its testing facilities. Nor is Tyler sensitive about stem cell research; he has invested $100,000 or more in both Amgen and the Genzyme Corp., each involved in stem cell experiments.
“You can read anything you want into my motivations for owning a particular stock of a company, but does it color my views with respect to issues I'm elected to vote on? I'd have to say that particular ownership of a given stock plays no part. A much broader issue is my business background, and that does,” said Tyler.
Said Bogaard, “There are some personal values involved in investments, but I … have looked to professional money managers for making those decisions, so I don't identify with specific companies in any way for sharing values I have.
“I'm not saying I have no responsibility. That's my account, and I know some investors who consciously seek investments in companies that are environmentally responsible [but] I myself haven't done it because I've looked to a professional company,” he continued. “Whatever skill I have in one field or another doesn't really pertain to investing in securities in the best way to protect the assets I have earned for me and my family, so I look to smart people.”
--------------------------------------------------------------------------------
Get a sneak peek of the all-new AOL.com.
Do potential conflicts exist for Mayor Bill Bogaard and his financially well-oiled City Council colleagues?
By Joe Piasecki
In his role as mayor of Pasadena, Bill Bogaard is an affable guy who seems able to get along with anyone, an extraordinary asset in governing a city this diverse.
Though not quite an everyman figure, Bogaard appears at the ready to hear the concerns of regular Joes. Nor is he an extravagant guy, having driven the same compact sport utility vehicle for the entirety of his three terms as the city's first elected mayor in decades (and arguably the most popular one of all time).
Like all public figures, Bogaard has a private life as well, and part of his involves playing the role of major Wall Street investor.
Maybe not much of a surprise at a time when corporations hold more political, social and economic influence than ever over the way most of us live our lives — but important for that very reason — is that the mayor holds millions of dollars worth of stock in some of the nation's largest and most influential businesses, and that other Pasadena City Council members are major corporate investors as well.
A business law attorney who engineered the merger between First Interstate and Wells Fargo banks, Bogaard currently has holdings in so many different companies that whatever you do in the course of a day — from buying gasoline or groceries to making a phone call, cashing a check or even using the bathroom — chances are you've used a product or service he has a stake in.
In order to protect the public against conflicts of interest, the law requires City Council members and other public officials to report in painstaking detail what contributions they receive toward their election campaigns.
For the same reason, they must disclose each year their income, investments and real estate holdings and that of their spouses through California Fair Political Practices Commission Form 700.
City Council members were required to file this document, also known as a Statement of Economic Interests, on April 2. The form does not specify exactly how much an investment or property is worth, but asks respondents to identify each holding within a somewhat broad range of values.
The form is also a tool to help office-holders abide by conflict-of-interest rules, said Bob Stern, president of the Los Angeles-based Center for Governmental Studies. “It's a reminder to the public official of what they own and what to watch out for,” he said. “Also, you know what you put down is in public record and people are looking at that.”
For what it's worth to us, the paperwork reveals that Bogaard and Councilman Sid Tyler are the council's top stock market investors, with most of their money in Fortune 500 companies.
As it turns out, the two also own stock in 17 of the same businesses, out of Bogaard's 63 and Tyler's 51, including investments in Exxon Mobil, General Electric, IBM, Microsoft and Home Depot.
Among council members, Tyler, a former health care executive, appears to own the heftiest portfolio, with 44 separate stock holdings of $100,001 to $1 million each, making its net worth $4.4 million, at an absolute minimum.
Much of his investment is in medical and pharmaceutical companies, including Pfizer (makers of Zoloft, Xanax and Viagra) and lesser-known makers of biopharmaceuticals and anti-AIDS drugs.
Tyler also owns $100,000-plus interests in PepsiCo, the Goldman Sachs Group, student loan providers Sallie Mae, pension managers State Street and Western Union.
Council members who listed no stock holdings at all include labor union attorney Victor Gordo, La Salle High School teacher Steve Haderlein, real estate consulting firm owner Chris Holden and California Teachers Association consultant Jacque Robinson.
The Bogaard Fortune 63
According to his Form 700 filing, Bogaard holds $100,001 to $1,000,000 worth of stock in 18 companies: Chevron, Exxon Mobil, Federal Express, Wells Fargo, IBM, Microsoft, JP Morgan Chase, Washington Mutual, insurance brokers AIG (American International Group), Whole Foods Markets, COSTCO Wholesale Corp., Lowe's, General Electric (which also owns NBC-Universal), Union Pacific, the Robert Half International temporary labor agency, Carnival Cruise Lines, United Technologies Corp. and American Standard (best known for its toilets and plumbing fixtures).
Bogaard, who said he relies on professional money managers to make investment decisions, also holds $10,001 to $100,000 in stock in 42 other companies:
In household goods, Bogaard's interests include Nestlé, Wal-Mart, Walgreen's, Williams-Sonoma and Unilever — makers of Lipton beverages, Wish-Bone salad dressing, SlimFast, Country Crock butter, Dove and Ponds soaps, Bertolli pasta, Vaseline and the hyper-sexualized AXE brand deodorant.
Bogaard's filings also reveal tech stock holdings the likes of Hewlett-Packard, CISCO Systems, Adobe and Intel; a piece of Southwest Airlines; engineering and military-industrial complex titans General Dynamics, United Technologies and Fluor Corp.; media giants Disney and Time Warner; oil driller Baker Hughes; automaker DaimlerChrysler; electronics and videogame maker Sony; Wellpoint (better known in California as Blue Cross and Blue Cross–Blue Shield); Johnson & Johnson; Avon Products; even McDonald's.
If you use a phone, chances are you're remotely connected to Bogaard's portfolio — that is if you use Sprint-Nextel, Verizon or AT&T.
Bogaard is also cashing dividend checks from Bank of America, East-West Bancorp, Citigroup, HSBC Holdings, Morgan Stanley, US Bancorp and Countrywide Financial.
Conflicts big and small
Why is all of this information important, or even relevant?
For one thing, Bogaard will be asked in October to vote on whether Verizon Wireless can install a controversial cell phone tower on an otherwise undeveloped hillside owned by the Hillsides Home for Children.
Is this a conflict of interest because of Bogaard's stock holdings? Possibly, but according to the law unlikely, said Stern. Fair Political Practices Commission rules take into account what impact a public official's action could have to a company he's invested in, Stern explained, and in a case such as this, one cell phone tower affecting coverage in a small part of the city would probably not have enough impact on the company or its stock to trigger concern.
When determining whether a conflict exists, “It depends on what the company is and how much the impact is on the company. My guess is [this instance] is probably not enough to disqualify a person from voting,” he said.
“My plan would be when this matter comes to us for a decision to talk to the city attorney and look at the statements and what the regulations are,” said Bogaard, who emphasized his support for public disclosure requirements.
Other examples of muddy, chance or infinitesimal government-corporate conflicts exist.
McDonald's, although they saw no profit other than a promotional opportunity, sponsored Pasadena's Lunar New Year parade in February, an event Bogaard voted to approve and later attended to deliver a proclamation from Gov. Arnold Schwarzenegger.
Newly elected Councilwoman Margaret McAustin might have experienced a conflict of interest this year had she not in April 2006 sold her $10,000-plus stock investment in Avery Dennison Corp. — the company that is funding the controversial Rose Parade float celebrating the Summer Olympics in China, a subject of heated discussion at council meetings.
And when it comes to investments in household goods, it's conceivable that City Hall (and most taxpayers) would find it nearly impossible to avoid purchasing things from companies that city leaders have a stake in, though according to Stern it would take more than a truckload of most types of goods before one could even assume a measurable benefit for a Fortune 500 company.
Rather than haggle about relative values of goods, “Anytime a product or service is being contracted with the city and is up for a vote at the council, whether large or small, I recuse myself. I don't know how many times I've done it in the last 10 years, but quite a number,” said Tyler.
Too close to home
While there's no crime in being rich, the sheer number of business investments pursued by council members has created conflicts of interest in the past which have caused them to refrain from voting on issues.
“Probably the biggest one,” said Tyler of his own experiences, “was that I happened to have a few shares of General Electric, and GE was the provider of the combustion turbines we were purchasing for the power plant at almost $100 million.”
Bogaard also refrained from that vote due to his GE holdings, he said.
Before joining the council, then-Planning Commissioner McAustin had to refrain from voting a couple times due to her investments, she said, including a limited partnership in Barnard Foothill, an office-space and self-storage provider with a facility on East Foothill Boulevard in Pasadena that was seeking to expand.
“We're invested in our communities in more ways than one,” said McAustin of city leaders who, like her, also have business interests in the city. “Anytime there's even the faintest chance there could be a conflict of interest, the standard in Pasadena is to avoid even the appearance of impropriety. Better safe than sorry.”
By far, the council member who keeps his money closest to home, where conflict of interest issues would most often occur, is Councilman Steve Madison.
A limited partnership interest in the Dona Rosa restaurant on South Arroyo Parkway has already resulted in Madison having to recuse himself while the council voted on making improvements to the area.
Madison is also heavily invested as a limited partner in the Athenaeum Fund — described on its Web site as a venture capital firm that invests in growing local technology companies — named after Caltech's Athenaeum building, where the idea for the company was first hatched.
Athenaeum Fund Investments include Viosense, a Pasadena-based company involved in sensor technologies developed at Caltech and JPL.
Under the subhead “Local resources for entrepreneurs,” The Athenaeum Fund Web site actually links to an Economic Development page on the city's own Web site.
Hearts and wallets
People often say “Put your money where your mouth is,” so is it also fair to assume a person's investment choices open something of a window to their positions on broader political issues?
For instance, as members of religious groups persecuted by the Chinese government addressed the City Council about their concerns regarding a float in the Rose Parade promoting Beijing's upcoming Summer Games, it seemed that council members who engage more in free market capitalism were less prepared to criticize this corporate-funded effort at cultural exchange.
Bogaard, who extended sympathy for any victims of human rights abuse, has nonetheless also expressed the view that economic interests and international ties often create opportunities for a better quality of life for people around the world. More inclined to question the float were Gordo and Holden, whose investments are in local property — though discussion was unanimously referred to the city's Human Relations Commission.
Perhaps another example of investments offering some clue to a person's world views occurred in March 2003, when the council was asked to consider drafting a resolution against the war in Iraq. Tyler and Bogaard are the only council members currently invested in defense contractors and Big Oil, and back then both voted to defeat an anti-Iraq War resolution in March 2003 (It went down 3-3, with Holden abstaining, former Councilwoman Joyce Streator customarily absent and Haderlein joining in opposition).
While no one has suggested that either Bogaard or Tyler decided war wasn't an actionable city issue with any self-interest in mind, it's fair to say neither will end up registering for the Green or Peace and Freedom parties anytime soon.
Likewise, Tyler probably isn't looking for the approval of animal rights groups, as he is invested in Covance Inc. — which openly conducts drug testing on animals, and a few years ago battled in court with PETA after activists alleged brutal treatment of primates at one of its testing facilities. Nor is Tyler sensitive about stem cell research; he has invested $100,000 or more in both Amgen and the Genzyme Corp., each involved in stem cell experiments.
“You can read anything you want into my motivations for owning a particular stock of a company, but does it color my views with respect to issues I'm elected to vote on? I'd have to say that particular ownership of a given stock plays no part. A much broader issue is my business background, and that does,” said Tyler.
Said Bogaard, “There are some personal values involved in investments, but I … have looked to professional money managers for making those decisions, so I don't identify with specific companies in any way for sharing values I have.
“I'm not saying I have no responsibility. That's my account, and I know some investors who consciously seek investments in companies that are environmentally responsible [but] I myself haven't done it because I've looked to a professional company,” he continued. “Whatever skill I have in one field or another doesn't really pertain to investing in securities in the best way to protect the assets I have earned for me and my family, so I look to smart people.”
--------------------------------------------------------------------------------
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