Leadership Case Study: Understand the Roots of Corruption in Bell, California

By Ehap Alahmed

In 2010, a massive level of corruption was discovered in Bell, California. Robert Rizzo, the city’s Chief Administrator Officer, made $1.5 million in total compensation annually, and four of the city’s five Councilmembers earned nearly $100,000 per year. The money was extracted from (a) raising property taxes; (b) issuing bonds for imaginary capital improvement projects; (c) creating a huge debt for city residents, and (d) imposing new additional taxes on businesses and targeting them for minor code violations. A network of corruption was possible by threatening local government employees and residents and by preventing the state and federal supervision by converting Bell to a charter city that is governed by its own chart. Above all, the corruption was possible because of low-educated, vulnerable, and disengaged society of Latino immigrants’ majority.
Solving the corruption problem and creating an anti-corruption environment required a well- informed, organized, and engaged society. Meanwhile, Bell residents are vulnerable, unorganized, and disengaged. The following action plan is developed to guide the newly elected city council on how to empower the residents and help them be more effective.

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Image from: https://www.msn.com/en-in/money/photos/countries-with-the-highest-and-lowest-levels-of-corruption/ss-BBT2Xof

First, as immigrants, and as victims of a bullying corrupted system, citizens are in need of care and support. The new city council should develop a personal relationship with (as much as possible) residents by showing them authentic care for their worries and a commitment to help them. Home visits and direct communication links with the city council are among the possible ways to personalize the relationship with residents as much as possible.

Second, the city council should provide a holding environment for the residents by organizing large meetings and discussion workshops. The residents should discuss with each other and with the city council how their disengagement contributes to the corruption problem and what attitudes and behaviors they need to change.

Third, the city council should use the possible resources to educate the residents about their rights and train them to work as an organized and effective group. The city council should protect the immigrants (especially the illegal) and make sure that they have the chance to contribute to the discussion and that their contribution would be considered.
Fourth, the city council should make sure that the changes the residents are required to make are consistent with their reliance. Otherwise, the city council risks damaging the holding environment.

Corruption in Bell, California 

As Reilly (2017) discussed, Bell is a municipality that is located southeast of downtown Los Angeles, with an area of 2.81 square-mile and over 35,000 residents. The average family income is $28,000 a year, which makes it one of the poorest cities in L.A. County. The Latinos consist of around 90% of the city and a great number of them are not in the country legally. In July 2010, The Los Angeles Times discovered a massive level of corruption committed by Robert Rizzo, the city’s Chief Administrative Officer, and his assistant Angela Spaccia. Rizzo was making $1.5 million in total compensation annually and four of the city’s five Councilmembers earning nearly $100,000 per year, whereas California law allows only $400 per month compensation for part-time council members.
The property tax for the low-income residents in Bell had increased to be the second-highest in L.A. County. The media wake triggered several investigations conducted by the L.A. District Attorney’s Office, indicting eight Bell officials, followed by the California Attorney General’s office investigation, the U.S. Securities and Exchange Commission, the State Controller, and the IRS. As shown by years of federal, state, and local investigations trials, the culture of corruption in Bell was a remarkable governance failure. In addition to Rizzo, multiple employees, consultants, and branches of government were also complicit in a huge scale self-dealing. To keep this theft concealed, Rizzo co-opted or fired those who opposed him. He increased his power by converting Bell into a charter city so the governing system was defined by the city’s own charter document rather than by general law.

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Image from: https://gawker.com/5644817/bell-california-americas-most-corrupt-town

Rizzo and his staff hid what they did from the public by operating without written policies or procedures. Rizzo created a network of virtual agencies to hide his and the council’s salaries, as well as his highly opaque system for conducting city businesses. He lied when residents asked for clarification and he bullied staff members and the city attorney into silence when they questioned his actions. To obtain the money for him and the others in his network, Rizzo extracted revenues from the vulnerable and poor residents by (a) raising property taxes; (b) issuing bonds for imaginary capital improvement projects; and (c) creating huge debt for city residents. He used the police force and code enforcement officers to target poor and suspected unlicensed and undocumented citizens and their families to meet quotas. Bell’s authorities also impounded cars and charged triple the rate in the neighboring cities to recover them.
In addition to increasing the cost of government services for Bell’s citizens, the city authorities imposed new additional taxes on businesses and targeted them for minor code violations, which finally led to a large exodus of businesses from the city. In the end, after being discovered:

Rizzo pleaded guilty to state charges and no contest to federal charges. He received a 12-year state prison sentence, [and he] was ordered to pay $8.8 million in restitution… The two leaders of the “Bell 8”, Rizzo and [his assistant] Spaccia, are still behind bars, while the others have served their official punishment. (Reilly, 2017, p.5)
To help the city recover, the county and state governments are helping the newly elected Council members and their officials.

Bell city is governed by a council-manager which is one of the most popular forms of local government in the United States (Reilly, 2017). According to Trounstine (2008), the major challenge for practitioners of council-manager is being reelected. Trounstine found that “When politicians cease to worry about reelection, they become free to pursue government policy that does not reflect constituent preferences. They acquire the ability to enrich themselves and their supporters or pursue policies that would otherwise lead to their electoral defeat” (Trounstine, 2008, p. 8). [As cited by Reilly, 2017]. Somehow, Rizzo was able to establish a political monopoly and not worry about being reelected. In Bell, civil society was confused and disengaged. As an immigrant population, the civil society was disempowered and could not participate in elections, or in the governance process. Lack of education among the council members was also contributing to Rizzo’s tremendous power as “Rizzo took advantage of an uneducated community, where social capital was at a negative ebb. Public participation, civic understanding, and engagement were nonfactors in Bell.” (Reilly, 2017, p.11).

To strengthen and perpetuate his power, Rizzo took some effective measures. First, he appointed candidates or they ran unopposed. He interviewed and selected who would fill any vacancies. Second, he removed the threat of losing elections by relying on the disempowerment of the residents in Bell. Third, he took advantage of a not highly educated council; meanwhile, Rizzo and his senior staff were well-schooled and trained. He discouraged officials in Bell from participating in professional organizations and attending conferences. Fourth, he changed the civil status of municipal workers to at-will employees, which makes it easy to terminate them. Finally, since Rizzo manipulated the system and gained the top officials’ loyalty (by paying high salaries, as well as accruing sick and vacation leave at extraordinary high amounts), very little negative information was available.

To conclude, the high level of corruption in Bell was possible for several reasons. The majority of the city’s residents were Latino and part of them was vulnerable because they were not in the country legally. In addition to that, Rizzo was able to avoid being accountable for general law by converting Bell to a charted city that was governed by its own chart. This paper focused on one of the most important factors that enabled such a high level of corruption in Bell, the disengaged civil society. The civil society in Bell was generally disinformed and did not participate in the city authorities’ work. Since most of them are not voters, Rizzo felt safe to not work for their public interest and he was not worried about being reelected.

Following is a discussion of how some theories and perspectives may explain the high level of corruption in Bell and what interventions are suggested.

Analysis: Adaptive Leadership

Heifetz (1998) discussed how leaders can deal with complex problems where the problem is unclear, and the solution required a stressful adaptive change in the followers’ perspectives and behaviors. In his book adaptive leadership, Heifetz stated that adaptive problems “lack clarity because a multitude of factions will have divergent opinions about both the nature of the problem and its possible solutions. One faction’s fix is another faction’s adaptive challenge. Competing values are often at stake” (Heifetz, 1998, p.86). Constituents go back to the authority to fix the problem. Authorized leaders mobilize the adaptive work by different capabilities. First, they provide a holding environment that facilitates adaptive work by containing and regulating the adaptive work stress, use the authority to control resources and to keep stakeholders working together. Second, the authorized leaders can command and direct attention. When living in hard situations, constituents tend to scapegoat the authority to avoid facing adaptive work. Thus, the leaders should redirect the attention away from themselves to the adaptive problem. Third, the leaders have access to information, so they can see the whole picture of the problem. Leaders are also supposed to investigate the problem more objectively than people in the problem grasp. Fourth, because of the privileged access to information, authorized leaders can control the flow of information to constituents. Leaders use this information control to determine which issues are ripe, generate a widespread feeling of urgency, and then pass information to constituents based on their assessment of their reliance. Fifth, the leaders orchestrate the clashed perspectives and values by encouraging different factions to cross the normal boundaries to engage their perspectives with each other. Orchestrating the different perspectives is necessary since the information needed to understand the adaptive problem are scattered among different stakeholders and the attitude and behavior adjustments needed for solution are also scattered among them (i.e. the solution is the sum of different stakeholders’ adjustments). Finally, the leaders decide the decision-making process after taking into consideration the severity of the problem, the stakeholders’ resilience, and the time frame to take action. For example, if the problem is technical, and the authority has the expertise to define it and solve it, autocratic or consultative decision making is appropriate. However, when facing an adaptive problem, a participative decision-making process that includes all constituents is necessary “because the problem lies largely in their attitudes, values, habits… [thus] the problem solving must take place in their hearts and minds” (Heifetz, 1998, p.121).

Adaptive leadership helps understand and solve the high level of corruption in Bell. First, lacking Bell’s civil society engagement is one of the main factors that enabled a high level of corruption. In other words, part of the problem lies in the people’s perspectives and behaviors which is an adaptive problem that Bell’s new elected representatives (authority) can’t provide a technical solution for. But rather, people should rethink their passive behavior and its consequences and compare these consequences with the benefits of being more engaged.

Second, the newly elected representatives can find a holding environment that provides a sense of safety for the vulnerable immigrants who constitute most of Bell’s population. The new city leadership should consider that immigrants may expose themselves to some troubles (e.x. transferred back to their countries against their well) if their engagement in the city’s public life requires them to reveal their immigration status. In addition, as immigrants, they are usually unaware of their rights and duties regarding their relationship with the city’s authorities. Thus, to empower them with enough knowledge, the new leadership can use the possible resources to educate the residents about their rights and duties.

Third, as a formal authority, the newly elected representatives have access to information that (supposedly) puts them in the balcony and enables them to see how the different pieces of the puzzle fit together. Thus, they should orchestrate the clash interest and show the different parties the benefit of crossing their perceptions’ traditional boundaries. For example, showing the residents and businesses the public service quality they get for being more engaged and at the same time, showing the city officials the benefits the city gets by retaining these residents and businesses (as taxpayers) to keep the local government running.

Analysis: Humble Consulting

Schein (2016) introduced a new approach to consulting, humble consulting, that emphasized the clients’ role in diagnosing their problem and finding solutions, while the consultant role is facilitating the clients’ discussion rather than providing solutions. The humble consulting approach is based on four interrelated assumptions. First, the consultant can be helpful by locating the problem, which is what really worries the client. Second, to get the client to speak about what is really worrying him/her, the consultant needs to develop open and trusting communication with the client. Third, to facilitate open communication with the client, the consultant needs to go beyond the formal (superficial) relationship and develop a task-related personal relationship (Level Tow). In this relationship, the consultant should be personal in what he reveals or asks. The consultant should not be formal with professional distance or too personal such that he may violate the client’s privacy. Fourth, to develop this personal relationship, from the first contact with the client, the consultant should show commitment to help the client, show curiosity about the situation and the client, and show care for the clients’ well-being.

To personalize the relationship with the client, the consultant should ask personal questions and listen empathetically to the problem and to the client’s feelings about it. When the personal relationship is developed, the client and consultant can discuss the problem and what help is needed. If the problem is simple, the consultant refers to the client to an expert for help. Meanwhile, if the problem is complicated, the consultant and the client discuss small adaptive moves that provide more information for the next adaptive move. It is the consultant’s responsibility to fully brief the clients about the potential consequences of the adaptive move and discuss whether the client is ready for it. Humble Consulting stems from the consultant’s humility in the face of the complex problem and from the client’s need to feel honored and taken care of by the consultant.
Humble consulting helps deal with the problem of corruption in Bell. First, by developing a personal relationship with residents, councilmembers may gain the residents’ trust and get them to talk frankly about their problem. Having in mind that Rizzo found a system of intimidation and threat, it is not likely that Bell’s residents may feel safe, to tell the truth to a consultant who keeps a professional distance from them. Meanwhile, it is more likely that they may discuss their worries with a consultant with whom they developed a personal relationship with. Without them telling their true worries, a consultant may be unable to see the real problem.

Second, humble consulting encourages the consultant to focus on the clients’ thought process rather than the content of their speaking. In Bell, part of the problem was the residents’ disengagement in public life and lacking awareness of their rights. Despite this problem, the clients (the city residents) may attribute the corruption to Rizzo’s personality and his bad measures. So, the consultant can redirect the clients’ thinking process to see what the conditions are that enabled corruption in Bell in the first place rather than being seduced to discuss the content (Rizzo’s personality). In other words, the consultant should redirect the clients’ thinking process from how Rizzo corrupted the city (content), to how the clients’ low engagement in public life, lacking awareness of their rights, and carelessness about standing up for these rights made the corruption environment possible (process).

Third, humble consulting stresses on the consultant need to show genuine commitment to help the clients, genuine curiosity to understand their problems, and genuine willingness to take care of them. Residents in Bell have been exploited and bullied for years by Rizzo and his corrupted administration. In addition, Bell residents are already a vulnerable immigrant community in which some are threatened by transfer and lack the citizen’s privileges. Thus, the consultant’s authentic commitment and care are of a great need for these residents. The consultant should hear and feel their problems and honestly show his commitment and willingness to take care of them.

Analysis: Systems Thinking

In his book Systems Thinking for Social Change, Stroh (2015) argued that in complex social systems where dispute factions are faced by problems, they need to think systematically and collaborate to solve these problems. Stroh (2015) discussed some advantages of systems thinking. First, systems thinking shows people their role in exacerbating the complex problem and this motivates them to change. Second, by showing each faction how it contributes to the problem, system thinking catalyzes collaboration between these factions since they all created the unsatisfying results. Third, system thinking focuses on the factions’ attention on key coordinated changes that can solve their complex problem.

Stroh discussed some archetypes that help the factions implement and evaluate the key changes that will (presumably) solve their problem. One of these archetypes is the Goal Achievement. This archetype is used when people cannot identify success to build on, thus it is used to bridge the gap between the real and desired situation. The archetype is based on three strategies (1) identify the corrections required to close the discrepancy; (2) persistence and give enough time to see the progress; and (3) if progress is not achieved (even after a time delay), understand the reasons for the shortfall and rethink the challenges.

The corruption problem in Bell involves several factions such as the newly elected representatives, the residents, and the businesses. The Goal Achievement archetype helps solve this corruption problem as shown in the following steps. First, identify the corrections required to close the discrepancy. The problem in Bell is the high taxes, improper treatment, and exploitation that residents and businesses suffer because of the corrupted city authorities. According to Trounstine (2008), the effective factor that keeps authorities away from corruption is worrying about being reelected. Since most of the residents in Bell are not American citizens, they can’t use the reelection card with the city authorities. One of the major corrections needed is offering the residents affordable law services to empower them against the judicial system and law enforcement authorities (that may reduce their worries of being transferred). Second, encouraging the residents to be more engaged in the public sphere and be organized as a pressure group that practices a kind of supervision on the authorities’ behaviors. Reilly (2017) stated that residents have decided to be more engaged with the local government. Another correction is educating the residents about their rights and encouraging them to report any violation from the local government to these rights.

Second, persistence and give enough time to see the progress. Establishing a transparent environment in which the local government is held accountable to the residents may take time. It may take some time for the local government to realize that corrupted officials will face a dissatisfied community and unfavorable consequences. It may take some time for the residents to realize the power of their engagement and collective work. It also takes time for immigrants to adapt to the new culture and to realize and stand for their rights. As newcomers, they may be vulnerable, lack courage, and feel disconnected with the local government. All that suggests the need for giving these corrections enough time before considering them ineffective and looking for other corrections.

Third, if progress is not achieved (even after a time delay), understand the reasons for the shortfall and rethink the challenges. The corrections suggested in the first step are based on the assumption that the local government is corrupted because residents are not engaged or organized and because residents lack the knowledge or the courage to stand for their rights. However, if corruption in the local government continues even after the corrections have been implemented, there is a need to rethink these corrections. It is possible that the local government is corrupted because of lacking state and federal supervision or because of lacking enough media coverage that keeps the residents informed about their local government policies. Which is not because of lacking the residents’ engagement.

Analysis: Managerial Economic

Two economic concepts help understand the corruption in Bell. First, the common good dilemma, which helps explain why the corruption takes place. And second, the opportunity cost, which sheds some lights on the indirect negative influences of corruption

First, common good dilemma. As shown in the table below, goods are classified according to whether it is possible to exclude some consumers from their benefits and to whether these goods are decreased by consumption. There is no over-exploitation problem for private goods (computers) and club goods (gym). The producers of these goods and services can deny them from free users, these products and services are only available for those who can pay. Public goods like media and intellectual production cannot be protected from free riders, still not a big problem since these goods are not consumed by the increasing number of users. The dilemma is that common goods like forests and oceans are hard to exclude from the public since they are common resources that no individual can claim. At the same time, the overconsumption of these resources diminishes their quantities.

Corruption in Bell is an example of a common good dilemma. The money in the local government treasury is a common good. No solo individual in the city can claim it; furthermore, residents are not eager to protect this money as much as they are to protect their own money. At the same time, when this money is stolen by Rizzo and his affiliates, its amount diminishes and that is negatively reflected on the residents.
The second economic concept is the opportunity cost. The opportunity cost is the cost of losing the benefits of alternative X because of adopting alternative Y instead. Corruption in Bell contains opportunity costs. First, because of corruption, it was hard for the city to retain its businesses or to attract new investments. According to Reilly “the city [Bell] authorities imposed new additional taxes on businesses and targeted them for minor code violations, which finally led to a large exodus of businesses from the city.” (Reilly, 2017, p.5). Meanwhile, if the city had a reputation for good governance and transparency, it would be easier to keep the businesses and to attract other businesses as well. Losing businesses means fewer taxpayers, which is a loss for the public treasury. For the residents, having fewer businesses means losing potential job opportunities, as well as losing access to better quality products/services at a lower price that is expected in an economic environment of multiple competing businesses. Thus, corruption in Bell did not result in losing public money only but also bearing the opportunity cost of the anti-business reputation.

References

Heifetz, R.A. (1998). Leadership Without Easy Answers. Cambridge, MA: Belknapp Press of Harvard.

Reilly, T. (2017, April). Frameworks for Understanding Local Government Corruption: Deconstructing the Case of Bell, California. Paper presented at the Western Political Science Association’s Annual Convention, Vancouver, CA.

Schein, E.H. (2016.) Humble Consulting. Oakland, CA: Berrett-Koehler Publishers.

Stroh, D. P. (2015). Systems Thinking for Social Change. Chelsea Green Publishing. ISBN: 978-1-60358-580-4 University Press.

Trounstine, J. (2008). Political Monopolies in American cities: The rise and fall of bosses and reformers. Chicago, IL: University of Chicago Press.

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