Staff at the San Diego Association of Governments pulled out their employee credit cards hundreds of times to pay for meals, often at upscale dining spots and with bills topping out at more than $100 per visit, an inewsource review of the regional planning agency’s records reveals.
A recent internal audit at SANDAG already flagged questionable purchases on the credit cards, including “unallowable” charges at local restaurants. But receipts and transaction logs now show that taxpayer-funded restaurant visits were a regular practice for some of the agency’s highest-paid employees.
Why this matters
With a $1.13 billion annual budget, the San Diego Association of Governments is a taxpayer-funded planning agency that helps make long-term decisions that impact the entire region.
Staff dined at places such as Rei Do Gado, Donovan’s steakhouse and the U.S. Grant Hotel restaurant, reporting the meals as business meetings in agency records. While employees ate with fellow staff, they also were joined at times by elected leaders, other government officials, board members, consultants and lobbyists.
One expert called the transactions a “clear abuse” of public money.
“Perception is everything, and image,” said Sean McMorris, transparency, ethics and accountability program manager at government watchdog group California Common Cause. “If you’re viewed as a corrupt agency or an agency that abuses taxpayer funds, then it takes awhile to rebuild your reputation and rebuild trust within the community.
“That’s why these situations are so bad.”
Auditors last month found staff charged nearly $70,000 at local restaurants over a four-year period, and almost $250,000 on non-working days. The “vast majority” of expensed meals occurred in San Diego County, meaning they weren’t associated with travel, according to the report.
inewsource requested receipts and supporting documents that were reviewed under the audit.
Officials were unable to provide a total of charges that were considered improper because documentation to explain purchases was missing.
One example that inewsource found: CEO Hasan Ikhrata charged nearly $100 in May 2019 at Little Italy’s Craft and Commerce but failed to submit an itemized receipt. A transaction log reported that he and a staffer attended a dinner meeting with a San Diego Gas & Electric Co. executive.
Ikhrata, one of the agency’s most frequent spenders at restaurants, charged $17,000 in meals over roughly two years and mostly at businesses in the county. In some months, Ikhrata had visited restaurants with an agency credit card more than a dozen times.
His out-of-town visits brought some of the most expensive restaurant charges. With four other SANDAG officials, Ikhrata charged more than $700 in September 2019 at the high-profile Occidental Grill in Washington, D.C., including branzino for everyone at the table, appetizers and entrees such as a $52 “feature meat” dish and a nearly $50 filet mignon, among other items.
The meeting was listed as a business dinner.
Ikhrata, whose salary and benefits total more than $580,000, has headed the agency since late 2018.
Auditors warned that paying for employee meals creates additional problems, because the IRS considers them to be taxable fringe benefits. Among their recommendations is immediately halting the use of credit cards at local restaurants.
In a statement to inewsource, SANDAG said it takes “our financial responsibilities seriously.” Staff are reviewing past transactions and will determine whether “any remedial or corrective action” is necessary, the agency said. It did not say whether SANDAG has stopped employee use of credit cards at restaurants.
“It is extremely important that we are good stewards of public funding,” SANDAG’s statement said. “In partnership with the Independent Performance Auditor, we have taken immediate corrective actions to strengthen our processes and provide the clarity and transparency needed to carry out the agency’s business in service to the people of the San Diego region.”
Common Cause’s McMorris said taxpayer-funded meals are appropriate when public employees are conducting legitimate business, but that strong policies are needed.
“I don’t think it’s a bad thing that they have expense accounts,” he said, “but if there’s no guardrails in place, then yes, abuse can and likely will happen.”
Eduardo Luna, a retired auditor who worked for the city of San Diego for more than a decade, told inewsource that agencies need comprehensive policies and regular evaluation. SANDAG should consider a policy that gives clarity to when publicly funded meals are appropriate for its employees, he said.
“You have to provide training to employees, you have to be highlighting abuses when things are not proper and things are falling through the cracks,” Luna said.
SANDAG said Wednesday that officials are drafting business meals and hospitality policies.
Several board members have called for the agency to explore action against employees who misused cards, including possible discipline. Carlsbad Mayor Matt Hall and county Supervisor Joel Anderson each sent letters to the agency’s management following the audit, saying the agency should seek reimbursement for any improper charges.
Hall said SANDAG wants to increase taxes to fund future transportation projects, yet its “credibility is hurt when it cannot demonstrate it has ability to manage taxpayer funds.”
The agency has since reduced its number of cardholders, and SANDAG Chief Economist and Deputy CEO Ray Major told the board it plans to implement all of the audit’s recommendations.
“I sit here before you to commit to you that we will implement these new processes to overcome the deficiencies that we have in our current systems,” he said.
Officials are expected to present the board with an updated policy on the credit cards later this month.
Type of Content
News: Based on facts, either observed and verified directly by the reporter, or reported and verified from knowledgeable sources.