Read an Excerpt
LOOK THE OTHER WAY OR FACE DOWN THE CORRUPTION?
Is it true that nice guys always finish last?
IN 1972, DAVID Stein was enjoying a terrific career on the East Coast with the largest home-building company in the world. He was so successful at it, in fact, that he wasn't sure whether he was good or just lucky, so he decided to move to California.
“I liked the company I was with,” David explains, “but frankly, it was the largest home builder in the world because it built houses the way Ford builds cars, mass–produced. I wanted to do something more creative. I chose California because it was, and probably still is, the leader in terms of planned community development and architectural and interior design.”
He went to work as a project manager for ACDI, one of the largest planned community developers in the country. Probably the company’s most important development was in Laguna Beach, a seven–thousand–acre planned community that stretched from the Pacific Ocean to the interstate highway that connects Los Angeles and San Diego. The prospect of working in this area seemed like a dream job for David, but he quickly realized that all was not well.
“Not only was the company not run the way my former company was,” he recalls, “but I felt there was real corruption within the company and it was very disheartening for me.”
David's concerns had to do with the process of getting projects approved. “It was clear that in order to get a project approved, it required political support, so the company's overriding concern was getting the support of politicians and not of the community.”
David wanted to manage good projects, but he found that at this company it was less important to manage good projects and more important to manage projects that could get political approval. “The way to do that was support the campaigns of politicians. And what made this corrupt in my opinion was that the decisions were not to be made on the basis of the projects’ merit but purely on political influence.”
David made another uncomfortable discovery. ACDI had a terrible reputation in the community itself. “They used to say that ACDI is a four-letter word,” he laughs. “It was clear to me that my first priority as a project manager was to build bridges with the community.”
David felt, not only as a matter of personal principle but also in the interest of the business, that a company should strive to be a good citizen of the communities in which it operates, and he personally intended to be a good citizen of the community. He could not choose to compromise either his personal or his business principles.
He knew, however, that building bridges was not going to be easy. Before David arrived, the California legislature responded to concerns about development by passing the California Coastal Act, which established the California Coastal Commission to set up criteria for development.
David explains ACDI’s response as the reason for community hostility toward the company: “ACDI had a huge property on the coast, so to beat the clock before the new law took effect, they started grading the property. They moved millions of yards of earth, and they did it in twenty–hour shifts, bringing in big spotlights so they could work night and day. There was also a piece of property on the sea that was a very popular surf spot. They cut off public access to it. They just seemed to do pretty much everything they could to piss off the people in the community.
“Even though I worked for the company, I came to feel that the bad reputation was deserved and that I should try to do something about it.”
His bosses did not think it was necessary. The system was working for them because of the political influence they had garnered. Here’s the process: First the project managers of the various companies presented their projects to a planning commission. Often, representatives of the community would oppose the projects before the commission. If the projects were then not approved by the commission, the companies were allowed to appeal this decision to the county board of supervisors, and, of course, if the companies had made the appropriate campaign contributions, they always won the appeal.
“But,” David says, “there was more and more community resentment being built through these practices. It could not continue, and besides, I felt it was utterly corrupt to game the system in this way.”
David began his own initiatives, meeting with community leaders and laying out his plans. They were suspicious. “First, I was with ACDI, which was bad enough, but there was also my own personal image problem. I came to one of the most conservative counties in the country, Orange County, with a George McGovern sticker on my car; I had long hair and a Fu Manchu mustache. The people I met with either had a flattop or a buzz cut. To say they were skeptical and suspicious is an understatement. But as I got to know them and convince them that I had the best interests of the community at heart, they put up with me.
“I had a lot of problems because my bosses thought I was an idiot. They said, ‘This is not the way it’s done.’ I said yes it is, and eventually this is what will be our survival because the time will come when we're going to have a lot of problems getting projects approved.”
At about the same time that David was reaching out to the community, a wealthy construction company owner, Ralph Dietrick, decided to run for the county board of supervisors. He invested a lot of his money in the campaign to unseat a longtime supervisor and was elected. He quickly moved to establish his power by donating money to other supervisors' campaigns and helping them get elected, the result of which was that Dietrick could always produce three votes, a majority, of the supervisors on any issue.
“He became famous,” David says, “for asking, ‘Do you know how to count to three?’”
During this time, David was not sure he would be able to remain with the company. But he did not want to give up on his goal of getting the community support that would convince the planning commission to approve the projects without having to appeal to a corrupt supervisor and his cronies.
He almost lost his job when he accompanied his boss to a meeting with Dietrick, a meeting that in David's view was not necessary.
“I was working on a project,” David recalls, “where there was a property line that went straight through some hilltops, and really it didn't make any sense. It was an artificial line. We needed a road to the top of a hill, but putting the road on one side or the other of the property line would mean destroying the hilltops and doing tremendous grading damage. So I had worked out an agreement with the neighbor that we would trade some land back and forth because it really wasn't buildable land anyway. This way we could snake the road through and not do environmental damage. The deal was a bit complicated and I was proud of having pulled it off.”
But David's boss, the general manager, was not happy. “You can't do that,” he said. When David asked why, the boss said, “That son of a bitch [the neighbor] screwed me ten years ago and I'm not doing anything that might help him.”
David was stunned. “But we can't do the road the other way,” he said. “It will cost a lot of extra money and besides, it's wrong.”
The boss made him change the road.
“I thought about quitting then and there,” David says, “but it wasn't the most important thing in a very big project and while it aggravated me, I thought the overall project was more important than that one issue.”
David dutifully took the project to the planning commission, and of course it was not approved because of the road. Then came the appeal to the board of supervisors. David’s boss insisted that David accompany him to a private meeting with Dietrick, who by that time had become chairman of the board of supervisors.
“My boss wanted me to go because he needed me to explain the issue because he didn’t fully understand it. All he knew is that he didn’t want his old enemy to get the road worked out.
“Well, I bristled against it but I went to the meeting, where I sat silently somewhat like a petulant child. It was clear to everyone that I didn't want to be there.”
This was to be the first time David got to witness the corruption firsthand. When his boss, Don, began to explain the situation, he stopped and said that David would explain it.
“So I told them the truth,” David says. “I told them that the plan was justifiably appealed because the road should not go where Don wants it to go.”
His boss shouted at David, “That's not the issue,”" then turning to Dietrick, said, “I want that road there and that’s it. I don't want to help this guy.”
Then Dietrick turned to one of his aides and a lobbyist who was in the room and asked, “Has Don bought a table to my dinner party?”
Don said proudly, “Yes, I did.”
“Understand that this was a $1,200 table,” David says, “which is probably equivalent to $10,000 in today’s dollars. So I just kept my mouth shut.”
Then Dietrick looked at Don and at the lobbyist and said, “Boys, this looks like a two–table problem to me.”
At this point, David got up and left the meeting without saying anything. In the car with Don, he asked, “How could you do that? I did what you wanted me to do.”
“Yes,” said Don, “and you didn't do it right.”
David responded, “No, Don, you’re wrong. I did do it right and damned if I was going to sit there while you negotiated the number of tables you were going to buy to get his vote. Excuse me, his three votes.”
David continued his work with the community leaders even though Don thought it unnecessary. “But I was being successful, really, and I know Don liked me, he just didn’t understand. He was doing it the way everyone always had done it.”
David was determined to change the company and end the corruption. The turning point came when he developed and presented to the planning commission the first project that did not have to be appealed to the board of supervisors.
“There was a very feisty planning commissioner nicknamed ‘Gravel Gertie,’ ” David recalls, “and the people in the community loved her because she was fighting the development. I remember the first time I had to come up before her. She hated me without knowing me because I was ACDI. She wouldn’t meet with me before the hearing because she thought that I would try to put pressure on her.
“On the day of the hearing I had the support of the community for my project, and I was sandwiched in between two other developers who had unpopular projects. The planning commission room was packed and there were people waiting outside.
“The first developer presented his case, and then the community went on and on about how terrible the plan was. This took so much time, the commission had to delay the decision for two weeks. So when everybody came back after that, they were angry.
“After the first group left, I was up. The county staff made their presentation and recommended approval of my project. Then the chairwoman, Gravel Gertie, growled, ‘Now we're going to hear from the applicant.’”
David had decided that he would try to lighten up the proceedings with humor. This is not always a good idea because it can seem as if you are not taking the situation seriously, but David felt it was worth the risk.
“I hoped not to sound like an arrogant smart aleck,” he says. “But when the chairwoman said, ‘Now we’re going to hear from the applicant,’ I stepped to the podium and said, ‘Well, my name is David Stein, but actually if it’s okay, I’d like to say I’m the builder because if you say I’m the applicant, it will be really kind of disappointing for my mother. She thinks I’m a builder. I’ve been telling her I’m a builder, and if she finds out I’m only an applicant, it’ll be a problem.’
“The room broke into laughter, but the chairwoman turned red. I mean, she was really angry. But it broke the tension in the room. She slammed her gavel down two or three times and said, ‘Mr. Stein, please continue.’ And I said, ‘Okay, I work for ACDI.’ Then I said, ‘Could I amend that?’ She looked at me like I was crazy. And I said, actually instead of builder, would it be okay if I said I was a doctor because my mother really thinks I'm a doctor.”
Again, everyone in the room laughed, and David wondered if he had gone too far or if he had indeed undercut some of the tension and hostility.
Then he changed the tone. “Look,” he said, “I’m very proud of this project and I think it’s something that’s groundbreaking. The staff has supported it and I think the community, probably to your surprise, is here to support this project, not to protest against it, so I’ll give up the rest of my time and just respond to questions.”
Then the community leaders, one by one, stood to support the project. Afterward, the chairwoman called David back to the podium. “Mr. Stein, oh sorry, I mean Doctor Stein, I want to compliment you. The project is quite amazing, especially coming from ACDI.”
After this success, David began a relationship with the chairwoman that led to a collaboration between the two of them in a program called “Tin Cup” (Time is now to clean up politics).
The timing was perfect for David because the company’s business had slowed, and his boss, Don, was fired. David was named general manager of the division.
And this is where the real story of hard choices begins. The first thing David did was fire the lobbyist. Then he announced that the company would no longer give any political contribution to any politician except for the one supervisor from the company’s own district, and only then if it seemed justified. This was in addition to his Tin Cup activities, through which he and the Orange County Homebuilders Association were promoting a $1,000 campaign contribution limit.
There was also another home builders group composed of the major builders in the area. David, as general manager of his division, attended those meetings as well. He remembers one at which some of the “icons of the industry,” in his words, approached him and said, “David, we have to talk about this thing called Tin Cup because it's completely unfair and we have to block it. So, David, you need to leave the room.”
David asked why. “So we can discuss it and we don't want to discuss it in front of you.”
Only one builder supported David and said, “You can’t make David leave. He’s a member of the group.”
From the Hardcover edition.