California High-Speed Rail Project Faces Scrutiny Over Nearly $600,000 in Questionable Consultant Spending

California's high-speed rail project is under fire after a watchdog report revealed that nearly $600,000 in taxpayer funds may have been improperly spent by consultants. The state's independent Inspector General claims that public money was used inappropriately for travel to locations including a tiki bar, a cigar lounge, a nightclub, and an escape room.

The report, released this week, found that four consulting firms—KPMG, Nossaman LLP, AECOM-Fluor Joint Venture, and SYSTRA/TYPSA Joint Venture—violated state rules and their contracts when seeking reimbursement for travel expenses. Between June 2024 and April 2026, these firms were reimbursed over $2 million for travel-related costs.

According to the Inspector General's findings, $81,000 in expenses were not allowable under state travel rules, and an additional $543,400 were not permitted by the firms' contracts. Furthermore, $680,500 in reimbursed expenses lacked the required advance approval from the California High-Speed Rail Authority.

The alleged questionable spending included premium rideshare services to gyms, nightclubs, an escape room, a cigar lounge in Washington D.C., and a sushi restaurant in Denver. One single-mile Uber ride in downtown Sacramento reportedly cost taxpayers nearly $40. A KPMG consultant's travel, which included rides to a steakhouse over 25 miles from their home, was also cited.

The report indicated that travel was often vaguely documented and lacked justification, with reasons such as 'meetings with HSR executives,' 'project management,' and 'typical trip' being cited. The Inspector General also identified instances of first-class and premium airfares for which necessary documentation was missing.

Notably, SYSTRA/TYPSA Joint Venture received over $118,000 in reimbursements for international travel, despite its contract explicitly prohibiting such costs from being authorized. The report also highlighted a failure by contract managers to consistently demonstrate that travel was necessary, economical, and compliant with regulations, with some managers reportedly not requiring basic supporting documentation like receipts.

Internal communications cited in the report suggested that some consultants felt unable to challenge travel requests, even from top leadership. One contract manager reportedly stated that consultant travel needed written justification and advance approval, but a consultant pushed back, indicating it wasn't their job to justify meetings requested by CEO Ian Choudri and that others had learned not to question him.

Ian Choudri, the CEO of the California High-Speed Rail Authority, had previously taken a voluntary leave of absence in February following his arrest on suspicion of domestic battery. The authority stated at the time that he was unaware of any evidence of wrongdoing. The Sacramento County district attorney's office later declined to file charges due to insufficient evidence.

Independent Inspector General Benjamin Belnap stated that the travel findings indicate a broader issue, asserting that the authority 'has not developed sufficient controls, and reinforced a culture, that ensures compliance with state laws and regulations.'

In response to the report, the authority stated it would strengthen internal controls, implement more rigorous documentation and approval requirements, and seek recovery of improper costs. The project, originally envisioned to connect Los Angeles and San Francisco, has faced years of delays and cost overruns. The current focus is on the Central Valley segment between Merced and Bakersfield, projected to cost $36 billion and be completed within the next decade.

The Inspector General recommended that the authority update its travel policy, establish a uniform travel request form, and pursue reimbursement from the four firms for the unallowable expenses. The authority has committed to implementing some of these recommendations by March 2027, when the Inspector General's office plans to review its progress. KPMG and Nossaman LLP declined to comment when reached by the Daily Mail.