Between 2006 and 2010, the audit identified 11 instances in which board members reported economic interests — such as stocks, salaries and other types of payments — with vendors. Although some of the identified ties were in compliance with state conflict-of-interest laws, state auditors say two cases may be in violation.
The first case involves former Salinas CEO Samuel Downing. He had $50,000 in investments with 1st Capital Bank, the same bank the hospital system and CEO agreed to deposit $1 million into. The audit was launched after Salinas paid Mr. Downing $4 million upon his retirement last spring.
The second case involves Salinas’ $5.6 million in disbursements to Rabobank. Salinas board member Harry Wardwell serves as regional president of the banking firm and receives a salary topping $100,000.
The Salinas board has defended the contracting decisions called into question, saying “the audit irresponsibly alleges serious violations of conflict-of-interest rules without conducting a thorough consideration of the laws and how they might apply,” according to the report.
State auditors are referring both of these instances to the Monterey County district attorney’s office for investigation.
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