Deep divisions: Another controversy erupts in Atherton town hall
Just when it seemed as if things were quieting down, Atherton town hall is once again a house divided. This time, the lightening rod at the center of the storm is Finance Director John Johns.
To his supporters, Mr. Johns is a vigilant public servant whose efforts have put Atherton's financial house in order and introduced much-needed controls on how money is handled.
To his detractors, he's an ambitious man angling to get the city manager's job at any cost.
And to anyone who's been following Atherton's municipal soap opera, it all seems to lead back to lingering resentments stemming from the town's troubles in its busy building department.
Finance director suspended
The storm broke on Monday, Aug. 27, when Interim City Manager Wende Protzman placed Mr. Johns on paid administrative leave following a complaint that he created a hostile work environment. That same day, outside auditors from Caporicci & Larson arrived to conduct the annual audit of the town's books.
A door had to be installed on Mr. Johns' office so it could be sealed off, and the key is being held in the police department, Ms. Protzman said. The town hired attorney Mary Topliff to investigate the complaint, and Atherton police opened up their own investigation into a computer in the finance director's office that was allegedly vandalized or destroyed. Both investigations are ongoing.
Mr. Johns said he believes he is being targeted for turning up financial misdeeds in the town, and said that he's been threatened with physical harm on three occasions. He has hired an attorney, and said that the town's handling of the complaint against him may be a violation of whistleblower protection provisions in Atherton's fraud policy.
Councilman Charles Marsala told the Almanac he believes that Mr. Johns has been using his audits of the Atherton Building Department as a springboard to getting the city manager job. He is accusing Mr. Johns of overstating problems he turned up in the building department last year, focusing on "a few minor errors" instead of finding that staff "had done a great job managing approximately $1 billion in residential construction under (former Building Official Mike) Hood."
The citizen members of the town's audit committee are staunchly defending Mr. Johns, and questioning why the town suspended him.
Despite being removed from his job, Mr. Johns notified a Caporicci & Larson auditor that he'd turned up problems with employee expense accounts — including some in the Atherton Police Department.
Outside auditor Brian Kelly of Caporicci & Larson said he had a brief conversation with Mr. Johns outside town offices, but it was interrupted when Mr. Johns received a citation from the police.
Neither Mr. Johns nor police Chief Bob Brennan would comment on reports that Chief Brennan cited Mr. Johns for driving on an expired license on Aug. 29, as he was leaving the town's administrative offices.
The next week, two police officers stationed themselves outside a closed session council meeting, raising the hackles of a group of residents who showed up to comment on Mr. Johns' suspension.
And to top it off, Ms. Protzman and Mr. Johns both said they intend to apply to become Atherton's next city manager, a post that's been vacant since the retirement of Jim Robinson in July. Ms. Protzman, Mr. Robinson's assistant, was tapped by the City Council to serve as interim city manager while a headhunting firm conducts a search for a permanent replacement.
Mr. Johns said he believes the complaints against him are: making verbal threats against a peace officer; and acting in a disruptive or aggressive manner that is creating morale problems.
"If my understanding of the nature, scope and source of the allegations is correct, I'm confident I will be exonerated," he said in a letter to auditor Steve Larson that was distributed to the audit committee.
Mayor Alan Carlson, City Attorney Marc Hynes and Ms. Protzman said they can't comment on the complaint against Mr. Johns, due to the confidentiality of personnel matters.
Mr. Johns told the Almanac that the police department is not being audited, but that he encountered a pattern of "minor infractions of the town's purchasing ordinance. These observations suggested a tightening up was in order over purchasing controls."
Upon reviewing expense reports in several town departments, the Caporicci & Larson auditors found violations of the town's policies, but the amounts of money were not enough to materially impact the town's financial statements, Steve Larson told the audit committee at its meeting last Friday. Some expense reports submitted by the Police Department and the Public Works Department lacked preapproval, and there were a couple of charges disallowed under town policy — one for valet parking reimbursement and one for the purchase of alcohol.
However, it involved only a couple of thousand dollars and the reports had the required supporting documentation, he said.
"I'd recommend a complete review of all expense reports over the past year," Mr. Larson said, adding that the town should tighten up its expense report policy.
City manager job
According to Mr. Marsala, he met with Mr. Johns in October, as the town was struggling to right itself after a series of embarrassing revelations about the town's building department.
Mr. Marsala, who was serving as Atherton's mayor last year, said that Mr. Johns "said I looked bad as mayor with the problems in the building department and it was because Jim Robinson had not supervised the building department. He suggested I fire Mr. Robinson and name him to replace (Robinson)."
When informed of Mr. Marsala's allegation, Mr. Johns told the Almanac, "I'm not going to dignify that accusation with a response."
At the time, outraged citizens were lining up to ask why the town hadn't kept closer watch over the building department.
A three-phase internal audit conducted by Mr. Johns from June through October 2006, turned up problems with permits, sloppy and incomplete records, a lack of checks and balances, and a terribly inadequate computer system. It also found the department failed to charge a total of $134,000 in excavation surcharge fees.
The San Mateo County Civil Grand Jury initiated an investigation, and one employee of the building department revealed that she had been reprimanded following a personnel investigation.
On the other side of the issue, a group of residents and builders joined forces to defend the building department and Mr. Hood, and threatened to hold a recall election against Councilwoman Kathy McKeithen, whose complaints spurred the town's scrutiny into the department.
Mr. Marsala called Mr. Johns' audit findings "inflammatory," saying they implied that favoritism was at play.
"The residents were using the (audit) reports to conclude that corruption was going on," he said.
Mr. Johns should not have been interpreting building codes, and the $134,000 in uncharged excavation fees can be explained away as an appropriate use of the building official's discretionary authority, Mr. Marsala said. The fate of the uncollected fees became moot when the council rescinded the fee in September 2006 amid threats of legal action.
"So the question is, were the audit reports intentionally presented in a way to discredit both Mr. Robinson and Mr. Hood for the purpose of getting Mr. Robinson's job?" Mr. Marsala said. "No one on ... the finance committee, audit committee or grand jury challenged Mr. Johns' allegations nor asked for worksheets or background information. Whatever he claimed was accepted."
Mr. Marsala sent a four-page letter detailing his position to the Almanac, along with a binder of town staff reports, newspaper clippings and his two public records requests, both denied, that sought background information on the audit findings.
Both Mr. Johns and Sam Goodman, chairman of the audit committee, object to Mr. Marsala's assertions.
"The letter casts aspersions about the financial function of the town, the audit committee and the auditors in an attempt to convince of the accuracy of the letter," Mr. Goodman said.
He accused Mr. Marsala of attempting to influence the personnel investigation of Mr. Johns, and said the findings of the audits were thoroughly reviewed and are not in dispute.
Mr. Johns said that the finance department's audits of the building department were examined by the City Council as well as the audit committee.
"The record will also reflect that the findings were discussed in detail with the former city manager and with the building department," Mr. Johns said in an e-mail to the Almanac. "Additionally there is a substantial body of documentation available that will demonstrate that management was in complete agreement with our findings and fully committed to implementing the recommendations contained within said reports."
On Oct. 18, the council approved a laundry list of recommended changes to the building department, including an expensive permit-tracking software system and new computers, additional staff, a review of zoning codes and building regulations, updated procedures and a division of responsibilities to place checks and balances on the building official. Most of the changes are under way or have already been implemented under the direction of new Building Official Mike Wasmann.
Earlier this year, the council also voted 4-1, with Mr. Marsala opposed, to pursue action against several construction projects identified in the audits that were issued permits but appear to violate town rules. In one case, the owners are now suing the town; in another, the town dropped its abatement proceedings after owners demonstrated that it had been town practice over 14 years to allow other homes with mansard roofs to use the same loophole that they had.
Letter "not helpful"
Councilman Jerry Carlson, who is also a member of the audit committee, said he was perplexed by Mr. Marsala's letter.
"This is dealing with subjects that are either in litigation or under investigation, and I don't think that's correct," he said.
Mayor Carlson admonished audit committee members and the public for repeating rumors and speculation, and asked everyone "to take a step back" and let the investigation run its course.
"I don't find the letter by Charles Marsala to be particularly helpful, nor do I find the comments from this committee very helpful," he said. "Nobody is criticizing (Mr. Johns') competence. I understand that what is under investigation is his conduct."
Councilwoman McKeithen was in Russia when the controversy erupted. She said that, after working with Mr. Johns for seven years, he has her support and that she hopes the complaint investigation can be resolved amicably.
"I found, without exception, John to be one of the most hard-working, honest, loyal employees, totally without any kind of guile," Ms. McKeithen said. "I've seen him consistently put the town's well-being before his own self-interest."
However, she said the council should have foreseen the potential for problems among town staff when they asked Mr. Johns to examine the building department.
"Without question, he was put in an untenable position," she said. "At the time, he seemed to be the best person to do the job. But who likes having one's actions reviewed by a fellow employee, and potentially reported on?"
According to Mr. Goodman, the audit committee chair, if town employees cooperate with audits, there's no reason for hostility to exist. "After all, audits are conducted for the benefit of the populace that pays taxes," he said.
This month, the audit committee plans to ask the City Council to expand the committee's charter so that it can work more closely with the finance director and help conduct operational audits of town departments, Mr. Goodman said.
"I wish Atherton was a sleepy town that doesn't shoot itself in the foot, but we're not. We keep hurting ourselves," Mr. Goodman said.
John Johns: Atherton Finance Director John Johns is accused of creating a hostile work environment and has been suspended pending an investigation. He has been credited with cleaning up the town's finances and securing a series of "unqualified" audits attesting to its financial health. In 2006, at the City Council's behest, he conducted a three-phase audit of the building department that resulted in a series of changes in its operations.
Charles Marsala: Councilman Charles Marsala said he now believes the building department audits conducted by Mr. Johns in 2006 were flawed. He's accused Mr. Johns of inflating the problems in the building department in order to position himself to be named city manager.
Sam Goodman: The chair of the Atherton Audit Committee, Sam Goodman has staunchly defended Mr. Johns' performance as the town's finance director. He's a former Realtor and an Atherton Civic Interest League director. The audit committee is an advisory body tasked with overseeing the annual outside audit of the town's books, as well as providing guidance to town staff on financial controls throughout the year. It's made of up two council members and five council-appointed residents.
Kathy McKeithen: A councilwoman since 2000, Kathy McKeithen ran for office as an outsider seeking a more open and trustworthy town government. She is one of two council members on the audit committee, and she pushed for the audit of the building department. She supports Mr. Johns and says the council put him in an "untenable position" when it directed him to audit the building department.
Wende Protzman: In August, the council appointed Wende Protzman, the assistant to city manager Jim Robinson, to serve as interim city manager following Mr. Robinson's retirement at the end of July. She said she acted on the advice of the city attorney when she placed Mr. Johns on leave after receiving a complaint about him. A head-hunting firm has been hired to search for city manager candidates; Ms. Protzman has said she is interested in applying for the job.