LA Weekly's Jeffrey Anderson is on the scene. Go get 'em Rocky.

LA WEEKLY
APRIL 22 - 28, 2005
Where’s the DWP’s $12 million
Two secret training institutes remain unaccountable to the public
by JEFFREY ANDERSON

On his way into the Henry Fonda Theater last month to celebrate City Councilman Antonio Villaraigosa’s victory in the mayoral primary, S. David Freeman stopped and shared some of his plainspoken wisdom about the Department of Water and Power. The former DWP general manager was reacting to a recently released “for your eyes only” memo to Mayor Jim Hahn, in which DWP Assistant Vice President Mahmud Chaudhry warned that the International Brotherhood of Electrical Workers, Local 18, was driving the nation’s largest public utility toward a “moral and fiscal crisis.” (See “The Lid Comes Off,” L.A. Weekly, March 5.) To Freeman’s way of thinking, it seemed that Local 18’s tendency to “blur the lines between [negotiating] and criminal extortion” — as Chaudhry described its squeezing of concessions from DWP management — was a good thing. Local 18 business manager Brian D’Arcy should be proud of himself, crowed Freeman, as he stood near Hollywood Boulevard in his trademark Western hat. “Hell, if I was Brian [D’Arcy] I’d nail that memo to the wall of the union hall as a badge of honor,” Freeman said. “It’s his job to do his best for the members. If managers can’t stand up to him, that’s their fault.”

More at LA Weekly

Rocky Delgadillo made a big claim about going after anyone taking the taxpayer's money... Any movement from the City Attorney's Office?

Is it justice? No, it’s Fleishman-Hillard.

Criminal justice takes on a new meaning

Los Angeles Daily News, PR firm settles for $6m Fleishman-Hillard issues apology to citizens of L.A. by Beth Barrett.

Los Angeles Business Journal, Fleishman-Hillard Agrees to Settlement to End Claims it Overbilled L.A. Departments. By Amanda Bronstad.

Los Angeles Times, PR Firm Settles DWP Billing Suit for $5.7 Million. By Patrick McGreevy.

Don’t let this settlement fool you. There is no justice here. This is a perfect demonstration of two totally different perspectives and the politicians ability to spin off accountability.

From Fleishman-Hillard’s perspective they have their reputation and fiduciary duty to their stock holders. There are real consequences. People lost their jobs. Some have had their careers ruined. The settlement money comes out of their pockets. And hopefully, if appropriate, there are criminal penalties to deal with.

From the city’s perspective, they too have a reputation to uphold as tattered as it is of late. But that is about where it ends. The City Attorney’s office draws on endless funds and resources. It is common knowledge, don’t fight City Hall. They have no qualms of spending millions in taxpayers money to save hundreds on boondoggles. And as far as fiduciary duty to the citizens, honestly, I don't see anything resembling accountability.

If you listen to the experts, Hahn and Villaraigosa, they point to each other. The sad part is they are both right. But the only one confessing and paying the price is Fleishman-Hillard.

Why are we focusing on Fleishman-Hillard and not on the agents with the assigned responsibility for administering our tax money and city services? If we put all the responsibility on the vendors, we are creating a monster. Think about it. Who used their political clout to secure the contract? Hahn says Riordan started it. If we look at Riordan’s situation and what was going on at that time and place, it was the middle of deregulation. The DWP was going to be entering into competition with other energy providers. Consequently, an argument can be made there was a need for marketing. But once the deregulation fears were ended, there was no need for a marketing contract. It should have been terminated or left to expire with no additional expenditures. But, it wasn’t. Why?

Who were the agents administering the contracts? Did they continue to ask for the services? Did they complain about the services they received? Did they check the invoices? Did they do anything along the way to indicate some unhappiness with either the services received or the price paid? Or did they just maintain an accomplices’ silence until they were caught? It stands to reason that we should expect these agents should be charged with misuse of city funds, dereliction of duty, or incompetence for failing to administer these services. If they didn’t, I would keep moving up the chain to find the root cause. Was anyone deemed negligent? I for one am not going to settle for a lame excuse like, “Well the guy retired already.” I thought we established that this was supposed to be a just society and that we would not rest until justice prevailed. Justice doesn’t just happen all by itself. Delgadillo is making big claims that he will pursue any “vendor” ripping off the city. I noted that he is very careful to limit his search to one side of the transaction. I applaud Delgadillo’s zeal but it is obviously weak on the concept of “blind justice” and “justice for all.” I would like him to pursue the insiders, the instigators, and the perpetrators, too. The mismanagement of this PR contract and one sided enforcement gives reason to investigate the city’s legal services contracts as well.

Curtailing this kind of gross negligence and wanton mismanagement is much the same as any other crime. Take for instance prostitution. As long as law enforcement continued to focus on and arrest the vendors, prostitution merely adjusted and reached a workable new equilibrium. It continued to flourish because we failed to control the instigators—the Johns and the enforcers. As soon as the enforcers were directed to hold buyers accountable, the situation began to improve. It is the same with the city’s agents. If the agents have the option of behaving badly and taking all their booty, promotional perks, and retirement without consequence and the attorneys maintain relationships with the perpetrators and only prosecute the vendors, we have ensured continued mismanagement of tax dollars and the exodus of citizens, businesses, and employers that expect no less than good faith and fair dealing from city leaders and administrators.

The fact that the City Attorney’s office has unlimited funds, selectively controls the application of city laws, and has considerable influence on all the city’s departments and enforcement bodies is a recipe for disaster. When investigators like Dan Carver get fired for investigating the City Attorney’s Office clandestine operation, it is a clear indicator that this policing agency has gone awry. We surely can’t expect them to police themselves. Anyone in Fleishman-Hillard’s shoes would have to make the same decision given the odds against justice. Didn’t Delgadillo and company also benefit from Fleishman-Hillard’s services? The settlement is not justice. It is a blatant display of the imbalance of power and unabashed political clout running this city.

The rhetoric we hear from Hahn and Villaraigosa, has reduced evidence of city corruption to baby banter:
“Look what he did!” “He did it first!”
By the sound of things thus far, I anticipate few if any definitive character changes and no significant changes in plot or story line for the city.

When Monopolies don’t take care of their customers…

Customers go elsewhere. In November, I wrote an article on the Mayor’s inability to manage the Harbor effectively. The following article in Saturday’s Los Angeles Times is another harbinger of the beginning of the end of the Los Angeles Harbor heyday monopoly. It should also be a wake up call to the other monopolies in this town. If you don’t want to loose your monopoly status, you need to take care of your customers.

Posted on Sat, Apr. 09, 2005
Shipping lines look to build Mexican port because of LA backlogs

Associated Press

LOS ANGELES - A group of shipping companies says it wants to build a $1 billion port complex about 150 miles south of Tijuana, Mexico, because of severe congestion at Southern California ports.

Plans announced Friday by Marine Terminals Corp. include a complex of berths, warehouses and cranes that could handle nearly one-seventh the current volume at the Los Angeles port, or about 1 million standard container units a year, by 2012.

Company officials hope to connect the proposed Punta Colonet harbor, located on undeveloped farmland, to California with a new rail line. Construction would take at least five years.

"We have to get Colonet developed," said Walter J. Romanowski, an executive with Marine Terminals, a Los Angeles-based holding
company owned by shipping giants Evergreen and Yang Ming of Taiwan, Hanjin of South Korea and China Shipping of Shanghai. "There are no other viable West Coast options."

The ports of Los Angeles and Long Beach, together the nation's largest port complex, have become so congested that ships often
must wait up to a week before unloading their cargo. Environmental and other restrictions limit expansion, while backups at other West Coast terminals are increasingly common.

The companies have begun lobbying the Mexican government. If approved, the facility would be one of Mexico's largest public
works projects, requiring the construction of roads, housing, public buildings and other infrastructure where none now exists.

But company officials claim it would attract enough investment and business to pay for major costs of building the harbor and an accompanying city. By competing with California ports, it could siphon away part of the $200 billion in revenue generated each year by shipping through the state.

Mexican Sen. Hector Osuna Jaime said the port could create jobs and industry in Mexico, which has lost manufacturing jobs in recent years to China. Among the hurdles facing the project are Mexican laws that would bar foreign ownership of the rail line.

Over the past three decades, Southern California's twin ports
have grown into the country's main entry point for cargo containers. In 2003, the equivalent of 11.3 million 20-foot containers passed across the docks. Only the ports of Hong Kong and Singapore saw more cargo.

Why would you want to put your money in anything lacking in trust, integrity, or direction?

What goes up most come down. What goes up rapidly, if it follows the normal laws of physics, comes down rapidly, too. Recall the junk bonds and the dot-coms. Real Estate is no different.

As far as investments go, the prudent pundits will tell you to "buy low, sell high." Villaraigosa’s plan to invest pension fund money in subsidizing low income housing may not be well thought out.

At first glance, the plan seems like a real loser. Force pensioners to invest a portion of their pensions to entice the poor to buy into an already high balloon-ready-to-pop housing market. At second glance, it is a real loser – “buy high, sell low." When interest rates go up, buyers will run and hide. Consistent with current city government fiscal policy, this market is good for spending as long as it’s somebody else’s money. It begs to ask whose interests are being served. Way too many eggs in the labor, building, construction, and real estate basket.

What investor in his or her right mind would invest in Los Angeles when the experts advise otherwise? The contenders for Los Angeles City Mayor, James Hahn and Antonio Villaraigosa, both self-bonified experts, seasoned and knowledgeable political leaders, and manipulators of Los Angeles city policy, openly agree the City lacks trust, integrity, and direction. Not to mention alleged rampant city corruption, State and Federal investigations, or that they are the purported leaders of the parade driving big business investors out of town. Again, all that aside, with all the other available choices, why would you want to put your money in anything lacking in trust, integrity, or direction?

It seems to me that rather to invest in an over-priced and over-speculated residential market, it would be better to invest in creating a better climate for businesses and education to help us sustain or, at least, minimize the effects of the bust that follows an oversold housing market. Without employers, entrepreneurs, and an environment conducive to supporting them, e.g. an educated workforce and a consistently business friendly city government, one should anticipate turning the housing market into a glut of foreclosures.

Here are some comments from Vince Foley, Chair of the Retirees' Health Care and Benefits Committee DWP Retired Employees' Association. Foley is an ethical and trusted former manager at DWP. It is good to see he remains outspoken and an advocate of prudent fiscal policy and common sense. He is sorely missed at DWP. Vince Foley’s letter follows.

March 29, 2005
Dear DWP Retiree,

I watched the L.A. mayoral debate last night between Mayor Jim Hahn and Councilman Antonio Villaraigosa. I don't live in the City of L.A., but we are all interested in the future of the DWP, and specifically our Retirement Plan and our health plan coverage. The Mayor can certainly have an effect on our financial security.

In that light, a statement made by Villaraigosa last night scared
the bejeebers out of me. When discussing his plans if he is elected mayor, he included "...using pension funds to invest in housing initiatives in the City". Luckily I have TiVo, so when I heard that statement, I was able to "rewind" and listen to it three times so I wouldn't misquote him.

That scheme first raised its ugly head many years ago when then-Governor, Jerry Brown, sponsored legislation requiring all public pension plans in California to invest 25% of their portfolios in low-income housing. We were able to dodge that bullet because the State Legislature had no control over chartered-city pension plans. The next time we heard that scheme was just a few years ago when DWP General Manager, David Freeman, invited State Treasurer, Phil Angelides, to a DWP Retirement Board meeting to discuss his similar proposal to invest in low-income and affordable housing. Fortunately, the Retirement Board listened politely, then went about its business and ignored the proposal. Those were State officials trying to raid our Retirement Plan. Now we have someone a heck of a lot closer trying the same thing.

Low-income and affordable housing are noble pursuits, but should not be funded on the backs of retirees.

Even though you may not live in the City of L.A., you might have friends and relatives that can vote; make them aware that Villaraigosa wants to mess with our future!

Vince Foley, Chair
Retirees' Health
Care and Benefits Committee
DWP Retired Employees' Association

Civil Action Press thanks you, Mr. Foley.

Let's see, leverage the City's pensions to fund more union construction... Of course, with Mayor James Hahn's record of cookie jar raiding, union bias, and condoning management-orchestrated employee retaliation at DWP, no one is saying Hahn won't do the same thing.