State must not give in on water district suit

The inexplicable decision by three of the four members of the Mahoning Valley Sanitary District's board of directors to settle all legal claims with the Gilbane Building Co. of Rhode Island has raised the ire of Ohio Attorney General Betty Montgomery. We hope that Montgomery does not let her anger dissipate.
For a while there, we have thought that the attorney general and her staff had lost their desire to right the wrongs that had been perpetrated at the water district by former directors Edward A. Flask of Poland and Frank DeJute of Niles and some vendors that did business with the MVSD, especially the Gilbane Co.
But hearing the attorney general's unequivocal statement last week that the current board's decision on a settlement agreement means nothing, we are encouraged and offer her our full support.
We remain firm in our belief in Ohio Auditor Jim Petro's findings that $2 million in public money was wasted during the time Flask and DeJute were on the board. Petro sought recovery of the money and the attorney general filed suit against the two former directors and the Gilbane Co.
Even though the state has suffered legal setbacks, we remain confident that in the end the merits of the case will be recognized by some court. Indeed, there is an overarching issue that cannot be brushed aside. It relates to federal Judge George C. Smith's dismissal of the state's lawsuit against the Gilbane Co. Smith found that while the Rhode Island company, which served as the construction project manager for a capital improvement project that was expected to cost $50 million, did not actually earn all the money it was paid, the company could not be held liable. The attorney general appealed the ruling to the 6th U.S. District Court of Appeals in Cincinnati, where the case now sits.
No consultation
That is why the decision by MVSD board members Atty. Matthew Blair, C. William Burgess III and Harry L. Johnson is so inexplicable. The fact that they did not consult with the attorney general or any member of her staff is telling. Indeed, board member Atty. Al Fleming, who voted against the resolution, contends that "all parties, including the state attorney general's office, should be part of the agreement."
For her part, Montgomery goes a step further and says the settlement does comply with state law and "has no force or effect."
"Why would you give up now when we have an active and legitimate appeal? Let us do our job. They turned tail and ran because somebody [Gilbane] filed a counterclaim. We think they [board members] can easily win the case against Gilbane and should fight it," Montgomery said.
The attorney general is absolutely right in saying that this case isn't only about the $2 million that the state auditor said had been misspent by the former directors. It is about individuals in positions of power violating the public's trust -- and about a company accepting public dollars for work it did not do.
Even more disconcerting is a provision in the negotiated settlement that requires the board to return to Gilbane any money the company would be required to pay if the state won its lawsuit against Gilbane. In other words, the Rhode Island company would win, no matter what.
We don't blame Montgomery for being angry. We think it's time the 300,000 customers of the MVSD and the two member cities of the water district, Youngstown and Niles, also made their displeasure known to board members Blair, Burgess and Johnson.