The FBI said that Sempra may have violated the Foreign Corrupt Practices Act to get this liquid natural gas plant built near Ensenada.
Every time local media report that District Attorney Bonnie Dumanis got $200,000 in subterranean money, plus gifts, from Mexican tycoon José Susumo Azano Matsura, Dumanis’s election opponent, local attorney Robert Brewer, steps up his attacks on her.
But very few San Diegans know that it was Brewer who suggested, three years ago, that the United States government pursue Azano. Brewer was representing Sempra Energy, the parent of San Diego Gas & Electric. In early 2011, the Federal Bureau of Investigation concluded that there was sufficient evidence that “Sempra and its business executives may have engaged in criminal activity so as to justify the opening of a full investigation into possible violations of the Foreign Corrupt Practices Act,” according to documents that San Diego attorney Gary Aguirre got from the federal government through the Freedom of Information Act.
José Susumo Azano Matsura
Former Sempra accountant Rodolfo Michelon had filed a whistle-blower complaint. Among many things, he charged that Sempra had set up a multimillion-dollar trust in Ensenada, built an expensive fire station in Tijuana that was quickly abandoned, and passed $100 bills to the governor of Baja California — all for the purpose of greasing the skids to build a liquefied natural gas plant near Ensenada. After complaining internally about these practices, Michelon had been fired. So he filed whistle-blower complaints with the federal government. Ultimately, he was rebuffed. Now, Aguirre and attorney Dan Gilleon represent him as he tries again.
Eugenio Elorduy Walther was governor of Baja in 2003. At the time, Marathon Oil was well ahead of companies wanting to build a natural gas plant there. Suddenly, around the time that Sempra wanted to build farther south, Baja condemned Marathon’s property. Marathon hired the prestigious law firm of Boies, Schiller & Flexner to investigate. The firm hired an international investigative operation, Interfor, to probe the activity. Interfor found that Elorduy had bank accounts in offshore havens: the Cayman Islands and Switzerland. Further, “Governor Elorduy has also been linked to giving preferential treatment to Sempra Energy,” said Interfor.
In response to the federal investigation, Sempra hired two outside law firms, allegedly to look into the matter. One of those firms was the San Diego office of Jones Day. That’s how Brewer, a partner in that office, got to be working for Sempra.
In early 2011, representatives of the Federal Bureau of Investigation and Securities and Exchange Commission, Michelon, Brewer, and others held meetings about Sempra’s possible bribery escapades in Mexico.
According to the redacted documents Aguirre received, the critical meeting was on February 16, 2011. One attendee said the FBI should investigate two individuals he believed were culpable. One of them had an arrangement to get 55 percent of monies that Sempra might pay to settle a dispute over the property near Ensenada. That had to be Azano: in a civil suit filed last year, Sempra complained that Azano had an arrangement to get a 55 percent cut of whatever Sempra might be forced to pay.
But who at that meeting pointed the finger at Azano? The finger-pointer “couldn’t have been anybody other than Bob Brewer,” says Gilleon, who was Michelon’s only lawyer at the time.
Charles La Bella
One of the key government attendees at the meeting was Charles La Bella, a former United States attorney in San Diego and the senior Department of Justice attorney at the meeting. La Bella had also been a partner at a law firm with Robert Brewer.
According to Aguirre, the federal government closed Michelon’s first complaint and did “little, if any,” field investigation. Jones Day, Sempra’s law firm, “selected and screened virtually all evidence” considered by the Federal Bureau of Investigation and Securities and Exchange Commission. “Neither agency carried out an independent investigation of the allegations,” says Aguirre in the second whistle-blower complaint he has filed to get the government to reopen the Michelon matter. It appears the securities agency is, indeed, reopening the case.
I went to Brewer with a list of questions. He deferred most of them to Sempra, which came back with a brief statement saying that Michelon’s allegations were false. “The company cooperated fully with the government, provided documents, and made employees available for interviews,” said Sempra. The statement seems to suggest that the government did some of its own work, although Sempra’s words could be interpreted another way. Who interviewed the employees and looked at documents? The government? Or Jones Day?
At the time, the Washington Post wrote a story on the incident, noting it could not find a lick of evidence that the government did any investigating of its own. In November of 2010, Aguirre attended a conference of securities attorneys in New York. The head of the enforcement division of the Securities and Exchange Commission said that when it received a whistle-blower complaint, it would have the company do an internal investigation. If the agency felt the internal investigation had been “thorough and complete and honest and candid, the likelihood of us independently conducting that review is lessened.” In short, companies can have their own law firm investigate them.
Indeed, in 2001 and 2010, the securities agency announced initiatives that would give great latitude to a company investigating itself. Highly respected financial journalists such as Gretchen Morgenson of the New York Times and Christopher Matthews of the Wall Street Journal have written articles criticizing the federal government for permitting companies to investigate themselves.
Aguirre says this isn’t the first time a federal agency didn’t do its own investigation of Sempra. In another case, in 2009, one Securities and Exchange Commission official said to another, “Okay, I’m just a little concerned that we are just relying on what [Sempra’s counsel] tells us.”
The American Bar Association’s canon of ethics states, “The lawyer owes entire devotion to the interest of the client.” So how can a law firm hired by a company under investigation do anything but exonerate its own client?
Brewer did respond to one critical question. I asked him about the government’s practice of not investigating some charges but rather permitting companies to hire a law firm to probe their own potential wrongdoing. Said Brewer, “I am unaware of any governmental agency outsourcing criminal or civil investigations to law firms hired by the entity being investigated.”
Hmmm. I have always had very serious questions about Bonnie Dumanis. Now I have questions about Robert Brewer.