The Public Eye

Report details potential nepotism in Sacramento Utilities Department

Most of the blacked-out material in an auditor’s report appears to be names of Sacramento city employees with relatives in the department or the names of employees interviewed by the auditor’s office.
Most of the blacked-out material in an auditor’s report appears to be names of Sacramento city employees with relatives in the department or the names of employees interviewed by the auditor’s office. jvillegas@sacbee.com

The city of Sacramento’s Department of Utilities may employ more than 40 workers with relatives in the department, raising the risk that some employees could receive preferential treatment, according to the city auditor.

An anonymous whistleblower informed City Auditor Jorge Oseguera’s office last year that a supervisor in the Utilities Department had hired “relatives that work under” that person.

The auditor’s office asked utilities staff to provide a list of relatives working in the department, according to a whistleblower report obtained by The Sacramento Bee through the Public Records Act. The auditor’s report cautioned that the “list is not a complete list, and has not been verified with the employees to confirm the relationships.”

However, the report noted that “it appears that three individuals in the department have relatives working within their chain of command.”

Bill Busath, the city utilities director, said one employee reports directly to his cousin. The two other employees mentioned in the auditor’s report have relatives that are two levels up the chain of command, Busath said.

The whistleblower report obtained by The Bee has several passages that were blacked out – or redacted – before it was released. Those redacted sections include an exhibit titled “relationship diagram” and another exhibit referenced in the report that appears to list more than 40 utilities employees with relatives in the department.

Most of the blacked-out material in the auditor’s report appears to be names of city employees with relatives in the department or the names of employees interviewed by the auditor’s office. It’s not clear why those names and the diagrams were blacked out; a city spokeswoman did not answer inquiries seeking an explanation from the city attorney.

Oseguera said in an interview that his office received allegations that relatives of supervisors in the Utilities Department were given preferential treatment, but that those allegations are often difficult to prove.

“Proving preferential treatment is tough because you have to get into intent, and that’s a pretty high bar,” he said. “But I think the perception exists, and the risk is definitely there given how many related individuals are working there.”

The supervisors in question will be removed from decisions regarding promotions and discipline for their relatives, Busath said. That change could take time because of protections in those employees’ contracts, he said.

The Utilities Department has roughly 540 employees. If 40 are related, that would represent nearly 7.5 percent of the staff.

Busath said he does not think nepotism exists within the agency.

“I don’t have any evidence of favoritism,” he said. “We’re pretty careful about making sure our hiring is fair and nonpreferential. Personally, I feel it’s very important that we have strong policies.”

The whistleblower report recommended that the city manager and Utilities Department investigate the severity of the department’s “nepotism issues.” If issues are discovered, the auditor recommended the city “take corrective action where inappropriate supervisor-subordinate relationships or potential conflict of interest exist.”

Oseguera’s report indicates that his office required a report back from utilities officials within 60 days of the findings being released on Dec. 18, 2014. Busath said the department has compiled a draft response, but has not finalized its report.

The auditor’s review of the nepotism allegation also discovered gaps in the city’s policies.

It said auditors could find guidelines from 2002 that define nepotism. The document said employees could not directly supervise, recommend advancement for or investigate allegations of misconduct against a relative.

However, the auditor’s report said the memos “do not appear to be readily available or adequately communicated to employees.”

The city parks and fire departments have internal nepotism guidelines, but the rules appear to end there, according to the auditor.

“We found that the city does not have an official citywide nepotism policy in place,” the whistleblower report stated. “We understand the city has recently drafted a citywide nepotism policy, but due to union objection, the policy has not moved forward.”

City spokeswoman Linda Tucker said “a draft nepotism policy (is) currently being circulated for internal review,” but that the city won’t “have a definitive time frame for completion” until negotiating the policy with labor unions.

Oseguera recommended that job applications for city positions include a requirement that applicants disclose “any relationships that may run afoul” of citywide nepotism policies.

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