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The Lid Comes Off 

Secret memo to Mayor Hahn lays blame for DWP’s woes on union control

Thursday, Mar 3 2005
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Photo by Debra DiPaolo

The International Brotherhood of Electrical Workers Local 18, headed by business manager Brian D’Arcy, is leading the Department of Water and Power toward moral and fiscal disaster, according to a "for your eyes only" memo sent to Mayor Jim Hahn by a top DWP official.

In the six-page memo obtained by the Weekly under the state Public Records Act, DWP Assistant General Manager Mahmud Chaudhry warns Hahn that those who would stop the pillaging of the nation’s largest public utility are powerless to act in the face of "the union’s ability to affect the lives and careers of top managers, the implicit threat of strike and Local 18’s influence on politicians running for office or re-election." Since last summer, DWP’s problems have been the subject of ongoing City Council reviews.

"The DWP has become a fox-run henhouse of epic proportion," Chaudhry writes. "The union now runs the department. They blur the line between . . . bargaining and criminal extortion."

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The memo describes Local 18, which represents 98 percent of the DWP’s 8,000 workers, as a relentless bully, prone to manipulating the selection and decision-making of top managers and punishing those who resist, while extracting vast concessions for its members, who already earn more than other unionized city workers. It points to pay raises far exceeding the rate of inflation, "outlandish applications of benefits that spring up overnight" and contracting entities funded with public dollars but controlled by the union with no public accountability.

"By choosing union peace at any price, DWP leadership finds itself paying an exorbitant price," writes Chaudhry, formerly in charge of DWP’s largest power unit and now director of customer service. "Anxious to avoid conflict, management finally relinquished the duty — and with it the power — to exert control. With no one minding the store, it may be a matter of time before the union’s extreme bargaining advantage begins to impact the annual [revenue] transfer to the city."

Chaudhry, in the September 16 memo, urges the mayor to amend the City Charter to restore executive positions to civil-service status, institute mandatory annual performance evaluations and take steps to protect the city’s water and power supply against a strike. He claims that former general manager David Wiggs and acting general manager at the time, Henry Martinez, were beholden to Local 18, which had secured appointments for them based on union preference unrelated to performance or ability. "Favorite sons are protected from the consequences of their misdeeds, while rank and file see how well union cronies are treated," Chaudhry writes. "Conscientious managers are despised by the union, and tormented daily with false accusations, ridicule and personal attack. Those who associate with them can expect the same fate. Others soon equate ethical management with relentless retribution that can only be alleviated by vowing allegiance to Local 18." Wiggs and Martinez could not be reached for comment.

Five weeks after receiving the memo, Hahn acknowledged "a change in corporate culture" was needed and tapped former city legislative analyst Ron Deaton to lead the troubled DWP. The mayor’s choice of Deaton, considered the most influential person in City Hall, infuriated D’Arcy, the union boss, who sources say was boasting he could stop it from happening. Now the two are headed for a power struggle. "People are nervous about choosing one side or the other," said one official, who added that D’Arcy is still calling the shots at DWP. Deaton, recently diagnosed with cancer, took a two-week leave of absence but was back at work this week. Neither he nor D’Arcy returned calls for comment. But sources say Deaton, who has declined to meet privately with D’Arcy, as previous DWP managers had every Monday at Taylor’s Steak House, is troubled by D’Arcy’s rise over the last 10 years. It is during that period that the utility has had persistent labor-relation problems, including lawsuits alleging retaliation and intimidation by managers favorable to Local 18, and an erosion of management’s ability to say no to the volatile labor boss.

An example of unchecked bargaining power, Chaudhry writes, is the three-year, retroactive pay raise for Local 18, calling for 5 percent, 4 percent and 4 percent annual increases, despite the lowest inflation rate in 15 years. Retention bonuses offered to skilled line workers during the 1998 Staff Reduction Program were later given to unskilled workers, who received 14 percent raises in their first year. After citing a 60 percent increase in the price of tools, Local 18 received a 300 percent increase in tool allowance, Chaudhry writes. Allowed to handpick management members of the Joint Resolution Board, which approves contracts under the joint labor-management process, Local 18 struck a deal with Martinez, acting alone, to exclude managers in charge of the most labor-intensive units, which typically have the most complaints. Finally, he urges Hahn to demonstrate moral leadership worthy of a second term, and to disabuse Local 18 of the notion that it can exploit the bargaining process at the public’s expense.

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