California High-Speed Rail CEO Resigns After Reporter Confronts Board Over Consultants' Nightclub And Cigar-Lounge Tabs

Ian Choudri, the CEO of the California High-Speed Rail Authority, resigned late Wednesday, telling the board in an emailed letter that he needed to focus on "important personal and family priorities," CalMatters reported. The board named Joe Stephenshaw, the state's Department of Finance director since July 2022, to replace him Thursday morning after a closed session. Board chair Steve Kawa said the resignation took effect immediately.

The exit came in the middle of a two-day board meeting. CBS News California investigative reporter Julie Watts wrote that Choudri skipped the meeting, where the board was set to approve the long-delayed train contract.

The authority had stopped answering her requests for comment, Watts said, so she put her questions to the board directly.

Her questions went to consultant spending. She asked whether the board would let its chief counsel review every consulting contract signed in the past two years and seek clawbacks, and noted that taxpayers are paying roughly a quarter of a billion dollars over two years to consultants who are "not laying track or building trains."

The state inspector general had already put a number on part of it. Consultants at four firms (KPMG, Nossaman, AECOM-Fluor and SYSTRA/TYPSA) billed nearly $600,000 in travel the inspector general called questionable, including trips to a nightclub, a tiki bar, a cigar lounge, an escape room and a gym, CalMatters reported. Investigators found consultants flew first class and hired premium rides, many trips went to Folsom, where Choudri has a home, and some were made at his request. One legal consultant billed $86,500 in "travel time" and $40,800 in reimbursements for 30 Denver-to-Sacramento trips in one year, according to CalMatters' earlier report. The firms have since repaid nearly $1.3 million in reimbursements.

Earlier this month the board voted 7-2 to strip Choudri of his sole authority to sign and manage contracts under $25 million, sending them through in-house counsel. At that meeting Kawa said, "Not one dollar of California taxpayer dollars should be misused." The board had been weighing further discipline, including possible termination, an anonymous source told CalMatters, and Choudri's compensation this year exceeds $534,000.

On Wednesday, as he was leaving, the board unanimously approved a $772.1 million contract with Siemens Mobility to design, build and test three seven-car trains by 2030, with the authority paying up to $63.7 million more in import duties and tariffs.

In his letter Choudri said he had "led its turnaround into a successful program." The record he leaves does not match that claim. Voters approved a $10 billion bond in 2008 for a project estimated at $45 billion and due to finish by 2020. The latest business plan puts the cost at $126 billion to $231 billion with full buildout by 2040. The authority lost more than $4 billion in federal funding after missing train-purchase deadlines, and the inspector general warned in July that it could run out of cash by December 2027. Choudri did not respond to CalMatters' requests for comment.