Water is a valuable public asset which should be available to all, not sold to the highest bidder to exploit for profits.
Conflict Of Interest
In the world of law firms this is an important issue because they often serve many clients, and conflicts do arise. Most firms have well established protocols to avoid and resolve conflict issues. When there is doubt, you get a different law firm.
To illustrate, if you are on trial for a crime you did not commit, you do not want the prosecutor acting as your defense attorney – he would be conflicted and you would most likely wind up in jail.
New Garden Conflict Investigation
After New Garden’s sewer sale was complete, it came to light that the Solicitor’s law firm had a conflict. The law firm also did work for Aqua, the buyer. This was critically important because the Solicitor was one of the major architects of the sales agreement. Could he have been cutting too sweet of a deal for Aqua to benefit his firm at the expense of his New Garden client? That is the heart of conflict of interest issues.
When this came to light, New Garden agreed to hire a different law firm not associated with Aqua to investigate. That law firm did its investigation and reported its findings at the November, 21, 2022 special meeting.
The Conflict Report
The meeting presentations were recorded on video here: (LINK) The report by the conflict lawyer starts at 1:15:30 and continues for about three minutes. Here is our transcript of the report:
Neil Morris (the conflict attorney)
“OK so moving to the conflict issue. So we looked at this and the Lamb McErlane firm Vince Pompo was the solicitor for New Garden, and he did not represent, to our knowledge, Aqua in any matters. But there was concern that other attorneys in his firm had represented Aqua. So, the question was raised was there a conflict. And we looked into this, and of course there was a conflict. But in looking into it further, we learned that the solicitor did in fact disclose the conflict to the Board of Supervisors at that time. And at that time the Board of Supervisors waived the conflict, and Lamb McErlane continued.”
Voice from audience: “What was the date?”
Neil Morris:
“That was, I believe, sometime in 2016 to 2019 at that point.
Our conclusion was that there was not adequate disclosure. That we believe that they shouldn’t have continued representation. However, again looking with hindsight here what happened was that we concluded that there wasn't adequate disclosure. Lamb McErlane disagrees very strongly with that. They believe that there was disclosure. There was disclosure here. We believe that a something, something should have happened. There should have been change of counsel at that time.”
Neil Morris continued speaking about the resulting deal. It sounds to us like he was trying to sugar coat the situation by claiming that the resulting deal was okay. It is there to listen to if you are interested.
Summary
#1 – There clearly was a potential conflict. The Solicitor’s law firm did work for Aqua.
#2 – The conflict attorney stated: “to our knowledge” the Solicitor did not do work for Aqua. This phrasing brings up the issue of whether they directly asked the question. If they did, we would expect a statement more like: “the law firm stated that ...” Not having knowledge could be the direct result of not asking the question.
#3 – There was some form of disclosure and agreement by New Garden.
#4 – Yet, the conflict attorney concluded that there was not adequate disclosure and the Solicitor should not have been in his role for the sale. But, there was no explanation as to why.
#5 – Timing is important here. The conflict attorney gave an uncertain three year window as to when the disclosure took place. However, even the earliest date was well into the sale process. Proper protocol would have been to resolve potential conflict issues as soon as potential buyers were identified. In August-2014 potential buyers had visited and a request for proposals was being prepared. By December-2014 three proposals had been received. Presumably, Aqua’s was one of them. Pennsylvania American and DELCORA were probably the other two. All three should have been considered for potential conflict of interest at that time.
#6 - The Solicitor’s law firm "very strongly" disputed the finding of a conflict. But, there is no further explanation of why.
#7 - The Solicitor in question was a key principal at the meeting, but remained silent on the issue.
Subsequent Follow Up
We want to see the final report submitted by the conflict attorney. Therefore, we filed a right-to-know request to obtain it. That request was denied on the grounds of it was a “non-criminal investigation”. Apparently that is some loophole in the Right To Know law. This denial was upheld on appeal.
That denial makes no sense to us and smells to high heaven of cover up. New Garden contracted with an outside firm to study an issue. That firm did its work and filed a report. Normally, such a report should be public information.
New Garden has elected to not reveal the content of the report. Let that sink in. What does that suggest?
Later one of New Garden’s Board of Supervisors was asked about implementing one of the conflict attorney’s recommendations. The answer was there was no need to. When asked why, the Board member said because the Solicitor’s law firm said it was not necessary. We think it is hard to find a more obvious case of the fox guarding the hen house. What do you think?
Conclusions
There was some sort of conflict of interest in the deal. That is not an accusation one law firm is going to make lightly about another law firm.
If something was done wrong, New Garden should “fess up” to it and show people what happened how it will be prevented in the future.
How did that effect the deal? We will probably never know. It seems to us that New Garden is intent on making sure we never do.