Westlands Water District, a water land based in central California, on Wednesday announced a reimbursement deal with the US Securities and Exchange Commission (SEC). In connection with this settlement agreement, Westlands Water District will pay $125,000 as fine over the "Enron Accounting" case. While, Thomas W. Birmingham, general manager of the water district, and L. Dave Ciapponi, former treasurer of the water district, will pay a fine amount of $50K and $20K correspondingly.
On July 2010, the water district agreed to implement alterations to its bookkeeping policies, which was titled "a little Enron accounting" by the general manager. This prompted SEC to charge the Westlands Water District for concealing its financial hurdles from investors in 2010. The commission found that the water district's certified statement for its 2012 offering worth at $77 million contained certain misrepresentations with regard to 2010 debt coverage ratio.
However, SEC found that Westlands did not mislead investors of 2012 bonds and that it repaid the 2012 bond holders. The certified statement for 2012 bonds showed that the water district's debt coverage ratio outstripped a ratio of 1.25 for every year from 2008 to 2012. SEC affirmed that coverage ratio and revenue for 2010 were misguiding as the water district miscarried the facts regarding the 2010 accounting transactions and the effect of revenue adjustment in 2012.
The New York Times quoted Andrew J. Ceresny, SEC's director of enforcement unit, who said that the unrevealed 2010 Enron accounting transactions benefited Westlands' clients, but pushed its investors into gloominess. The commission accused Westlands for having disrupted the 1933 Securities Act that enveloped misrepresentation act.
Westlands said in a statement that its managers had corrected the accounting adjustments after consulting a district auditor. The water district also pointed out that the disruption was not planned and that the settlement order agrees with this view. Westlands is the biggest client of the Interior Department's Bureau of Reclamation that regulates water supply to farmers.
Currently, the water district, which provides water to irrigate 700 farmlands, is scheduled as one of the potential participants in a scheme organised by Governor Jerry Brown. The $15.7 billion scheme is aimed to construct two tunnels with 35-mile length in order to transport additional water supply to Southern and Central parts of California, as reported by THE SENTINEL. The water district is expected to contribute $3 billion for this water tunnel project.
However, Birmingham failed to comment whether the settlement charge will impact its commitment to finance for the tunnel project. It must be noted that no water agency has come forward for funding the tunnel project.
Westlands' adjustment of the 2010 accounting transaction terms has created a havoc among its investors group, who remain confused regarding their future in the water district. Westlands is still hopeful to attract more investors.
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