Cashing in on Safety
When government safety regulations force you to rebuild your garage or remove a door in your home, you pay dearly for those changes. How can you be sure the regulators aren’t privately cashing in on decisions that cost you so much? An NBC4 investigation zeroes in on regulators who aren’t disclosing potential conflicts of interest – and on loopholes in the state ethics law that allows them to do this.
Every time you buy or sell a home in this depressed market, you get socked with hidden costs arising from government safety regulations -- those pesky codes and permits homeowners have to satisfy to complete the sale.
One state agency has final say over what those regulations are. The eleven members of the California Building Standards Commission are appointed by the governor to approve the state’s building code.
“The purpose of this code is to protect life and property,” says Randall Akers, a former Los Angeles building inspector. He says building codes are critical to construction safety, but he also notes the code-making process is vulnerable to corruption because manufacturers of building materials are always angling to shape the codes to their advantage to benefit their products.
“The manufacturer has an enormous vested interest in getting his product approved and getting preferential treatment for his product,” Akers says. That’s why, he adds when it comes to the Building Standards Commission and its members “transparency is the key. Certainly, any conflict of interest should be disclosed.”
But this may be a problem with our current Building Standards Commission.
A secret source, who would not identify himself, told NBC4 that one commissioner, Susan Dowty, has business interests that deserve special scrutiny under state ethics law.
According to Bob Stern of the Center for Governmental Studies – who is not our secret source -- the central question should be: “Was as she participating in decisions that affect her economic interest or her company’s economic interest?”
Stern helped to write the state ethics law. He says Dowty does appear to have overstepped the law by not disclosing her income from a company called S.K. Ghosh Associated Inc.
“Clearly she is receiving income and it appears she should be required to disclose that income,” he said.
As a salaried employee and Vice President of S.K. Ghosh, Dowty helps write code-related training materials that the company advertises and sells through its website.
But she did not mention the company in the government disclosure forms she is required to file each year under the state ethics law.
“She’s giving seminars she’s making money from that although the records don’t indicate that,” Stern said.
But it’s not merely Dowty’s failure to disclose her business connection that worries Stern. The state ethics law also requires officials to disqualify themselves when their business interests conflict with their official duties. Stern says Dowty should have erred on the side of caution.
“She should either resign from the commission or she should not be getting money from the company for these publications and seminars," Stern said.
In response to queries from NBC4, the state Building Standards Commission admits that Dowty made a “mistake” by not disclosing her Ghosh salary, and she has recently filed amended disclosures.
But there are still questions. According to our secret source, Dowty and one other commissioner, Isam Hasenin, have ties to another company not mentioned in disclosure forms.
The company is called the International Code Council or ICC. Dowty’s own employer, S.K. Ghosh, lists ICC as a client, and the ICC markets Dowty’s manuals on-line. Hasenin is featured as a seminar presenter on the ICC website, and according to the company, every such instructor is paid for his services.
But nowhere on official disclosure forms does Hasenin or Dowty identify business clients like the ICC.
A significant omission?
According to its website and publications, the ICC writes the model building code on which California’s Code is based, owns the copyright to the California Building Code and has exclusive authority to publish it with all the profit that entails.
Lobbying documents show that the ICC also spends heavily to influence the Building Standards Commission and to get company favorites appointed to it.
Should any private vendor have such influence over the state’s code process? And shouldn’t any commissioner with ties to the company be obliged to disclose them under the ethics law?
Not so, according to the Building Standards Commission and even, Bob Stern.
“Part-time commissioners are allowed to have other jobs as long as they don’t conflict with what they’re doing as commissioner,” Stern said.
Stern told NBC4 that the disclosure rules do allow for certain privacy exceptions and do not oblige officials to identify certain clients or itemize certain income including earnings of $10,000 or less.
But if so, how can we be sure there’s no conflict of interest? What’s the use of an ethics law that allows for such blind spots?
“Disclosure should be very clear and very straight forward,” says Randall Akers, the former Los Angeles building inspector.
And doesn’t the ICC – a company so influential in the state’s code-making process — deserve special handling? Shouldn’t the disclosure rules be amended to insure that its client relationships are fully transparent?
“I think it’s important to take a look at what’s transpired here,” says State Senator Bob Dutton (R-Riverside). Dutton, a member of the State Senate Rules Committee, which approved Dowty’s appointment, says he’s launched an investigation into NBC4’s findings.
“And I know there’s some additional investigations going on but I can tell you in a case where somebody may be actually directly involved in developing codes and also being able to profit from it, I think there’s some real problems with that,” he said.
The privately-run ICC declined to answer questions regarding its involvement in the California code process, and Commissioner Dowty let her own agency speak for her. It insists that whenever a commissioner has a perceived conflict of interest, he or she is asked to withdraw from key decisions. It also notes that commissioners are unsalaried, although they are paid for expenses.
