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The Ethics Dilemma

Photo by Ted Soqui

In early 2002, the Los Angeles City Ethics Commission slapped City Council President Alex Padilla with a record-setting $79,000 fine for breaking his promise to honor campaign spending limits. A few months later, when it was Padilla’s turn to appoint someone to the five-member panel, he called up former District Attorney Gil Garcetti.

“He said, ‘We need someone who’s had a different experience and background,’” Garcetti recounted recently at a commission retreat. “‘You’ve actually run for office. And you’ve prosecuted election cases. And I think you bring something different to the table.’”

Padilla was right. Never before has a member of the panel that guards against City Hall corruption and cronyism been so tightly connected with the very people he is supposed to regulate.

Amid new turmoil and soul-searching at the Ethics Commission, Garcetti, now the commission president, brings unprecedented insider status and a track record of City Hall alliances and enmities to a panel that historically has prized and carefully guarded its charter-mandated independence. The people whose campaign and office treasuries he is supposed to scrutinize include his own son, Councilman Eric Garcetti, and a man with whom he had a very bitter public spat, former police chief (and likely mayoral candidate) Bernard C. Parks. City Hall contractors, lobbyists and fund-raisers, always at the center of commission debates over improper influence in government, contributed thousands of dollars to his three campaigns. Mayor Jim Hahn, as city attorney, once partnered with him to block legislation that would have permitted the commission to have the full powers intended by Los Angeles voters.

Now, Garcetti is trying to get the ethics staff to drop enforcement actions against candidates with small campaign violations and focus instead on bigger political crimes. It is a policy shift that could directly benefit his son.

The possibility is far from academic. Last month the commission’s audit staff found that Eric Garcetti improperly used his office’s political account and failed to provide the commission with copies of campaign mailers. No enforcement action has yet been taken.

Also in April, in the midst of a sweeping review of the commission’s purpose and power — and amid grand-jury probes into contract corruption allegations that focus on Hahn’s deputies and appointees — Garcetti stunned some on his staff when he told Hahn that the panel would look to the mayor for leadership on ethics-reform issues like regulating independent campaign expenditures.

“We would eagerly accept your leadership on this issue and any other issue involving the Ethics Commission,” Garcetti told the mayor.

It was an astonishing statement from the commission’s leader to a mayor who, a year earlier, scuttled carefully drafted Ethics Commission reforms that dealt with independent spending.

Garcetti’s statements, background, bluster and mere presence on the panel are sending shivers down the spines of many who consider themselves part of the “reform community.” At commission meetings, he — and, increasingly, his colleagues — challenges Ethics Commission Executive Director LeeAnn Pelham and her staff as they try to explain to the five panelists the basic structure of the Ethics Commission as set forth in the city charter and state law: The staff investigates and prosecutes. The commissioners are judge and jury, and have no more business participating in probes than a judge does when presiding over a trial.

Tension between the staff and the commissioners is increasingly obvious. Meanwhile, enforcement matters have stalled as the commission delays ruling on settlements, like one brought to the panel in March for minor overexpenditures in Mike Feuer’s 2001 city-attorney campaign. Enforcement Director Deena Ghaly implied last month that former candidates and contributors accused of breaching campaign laws are holding off on settling while they wait to see whether Garcetti will lead the panel into a new era of lenience.

Robert Stern of the Center for Governmental Studies warned the commission at a recent session that some agencies, like the Federal Elections Commission, eventually become co-opted by partisan politics. “And my concern is you have to be very careful to maintain your independence from the regulated community,” Stern said. “The regulated community does not want to have strict enforcement. They want to have less enforcement.”

Garcetti and his commission colleagues insist that their critiquing of the commission’s status quo is not aimed at weakening the panel’s enforcement power. Quite the opposite.

“I look at the commission’s work and I have to ask, Are there more significant issues and cases than those we are dealing with?” Garcetti said.

As District Attorney Steve Cooley — who ousted Garcetti from office four years ago — leads high-profile probes of government corruption in city contracting at the airport, the harbor and elsewhere, Garcetti and his four colleagues find themselves wondering where they and their staff fit in when the headlines hit. If they are asked at cocktail parties about the inside story on all the corruption talk in L.A., they must answer, if they’re honest about it, “I don’t know.”

The big stories about subpoenas and grand juries play out without them, while their time is taken up giving rote approval to staff-negotiated settlements of $1,000, $1,500, $2,000, for accounting errors in campaigns from three years ago. They are frustrated. They are outsiders in their own department, and they have made it perfectly clear to Pelham and the rest of the staff: They want in. The question remains: Can a consummate insider like Garcetti redirect the Ethics Commission without wrecking its perceived independence?

 

The Los Angeles City Ethics Commission traces its origins to a 1989 City Hall influence-peddling scandal involving then-Mayor Tom Bradley. To defuse the political fallout, Bradley appointed a political-reform commission to draw up ethics laws and then tapped attorney and professor Geoffrey Cowan to head it.

After weeks of hearings, Cowan’s panel called for partial public financing of city elections, paired with contribution and spending limits to curb influence by big-money interests; tight reporting controls on lobbyists; and, to administer the reforms, an Ethics Commission of five members. They would serve limited terms and have no chance of reappointment, to assure independence from City Hall. Voters overwhelmingly adopted the proposals in 1990.

The new Ethics Commission got off to a high-profile start after receiving an informant’s tip about misuse of city time and resources in then-City Attorney Jim Hahn’s office. Benjamin Bycel, the first executive director, went to District Attorney Ira Reiner, who got a search warrant and sent more than a dozen investigators on a day-after-Christmas raid of Hahn’s office in 1991.

They left with telephone records, computer disks and other documents they said showed that state Democratic Party vice chair Charles Fuentes, a top Hahn aide, and several others had turned the City Attorney’s Office into a virtual campaign fund-raising headquarters. A grand jury prepared to receive testimony from Hahn and Fuentes, and the commission was expecting to see a felony prosecution for misappropriation of public funds.

But in late August 1992, Reiner, who had found himself in a bitter re-election runoff against his former top aide — Gil Garcetti — abruptly called off the grand jury, dropped the case and issued a report that cleared Hahn. A few days later, Reiner dropped out of his own re-election race, conceding to Garcetti two months in advance of voting day.

Meanwhile, the commission tried to exercise its power under the Cowan measure to hire an independent lawyer. But Hahn’s office said the clause was ineffective without special enabling legislation in Sacramento. A state lawmaker drafted a bill, but it was defeated after hard lobbying against it from two sources: Los Angeles City Attorney Jim Hahn and Los Angeles County District Attorney Gil Garcetti.

“I didn’t have kind words to say about the Ethics Commission back then,” Garcetti acknowledged at an April 3 commission retreat, “because to me it wasn’t — quite wasn’t sure what they were trying to accomplish. But then, as D.A., we worked more with the Ethics Commission, and things started working, I thought, pretty well.”

Garcetti’s office did join with the commission staff in a money-laundering case against former Councilman Arthur K. Snyder. But in an odd plea bargain, the district attorney allowed Snyder to plead guilty — but to immediately appeal. Dozens of top Los Angeles elected officials, lobbyists, and other movers and shakers sent the appeals court letters testifying to Snyder’s good works and character, and the justices reversed the guilty plea on a technicality. Because of the unusual plea bargain offered by Garcetti’s office, Snyder beat the rap without going to trial.

 

Commission audits became a key tool to ferret out money laundering. But most charges have involved excess campaign contributions or broken spending caps, leading to an identity crisis for panelists who expected to weigh the ethics of government officials instead of reviewing accounting errors.

One source of the confusion comes from the name Ethics Commission, which in standard practice refers to both the commission and its staff. In fact, both entities have vastly different roles under the city charter. The Ethics Commission, meaning the staff, investigates the case, makes the accusation and negotiates a settlement, in secret. Only then does the matter come to the Ethics Commission — meaning the five unpaid part-time commissioners.

Under Garcetti, the commissioners have grown restive and unhappy with their lack of control over enforcement actions, especially as Pelham and Ghaly have instituted a policy of fining all campaign-finance violators for every infraction, no matter how small, regardless of intent.

The staff argue that it is the fairest possible system, treating all violators equally and removing any hint of favoritism or personal vendetta. But Garcetti is questioning the staff’s approach and how that policy came to be without direction from the panel. Elected officials and their lawyers complain the ethics staff is geared toward trapping unwary candidates over math mistakes by volunteer campaign workers.

“Is this really what the business of the commission should be?” asks election-law attorney Stephen Kaufman. “Or should it be about helping candidates comply with the law?”

Kaufman, of the Los Angeles law firm Smith Kaufman, is so sought after as a campaign lawyer and treasurer that he now represents more than half the members of the City Council, as well as candidates around the state. But for all his expertise and backup accounting systems, it is inevitable that in the heat of a campaign some client of his, like any candidate, will have a volunteer who loses a receipt, or misses an extra $500 contribution, before the commission’s audit team arrives.

By then it will be too late. There will be an allegation, and a settlement offer. The candidate can accept it, or request a full evidentiary hearing in front of the full Ethics Commission, extending the period in which the candidate’s name and “ethics violations” share newspaper headlines. More often than not, the offer is accepted. Even then, there is invariably a negative newspaper story when the settlement is made public, and a second one when it is adopted by the commission. The candidate is branded forever as an ethics violator.

“I’m not suggesting the commission should give people a pass for true ethics violations,” Kaufman said, “but when it comes to technical violations or accounting errors, some rule of reason must be applied. Absolute perfection is impossible under the complex rules campaigns are required to follow.”

The commission has retained the pro bono services of Dave “Lefty” Lefkowith, a management expert who has combed through the staff’s time sheets and is preparing recommendations that he said would speed up the audit process and provide an effective alternative to zero-tolerance enforcement. Garcetti and his colleagues were forced to agree at a recent meeting that, based on Lefkowith’s findings so far, and on numbers provided by Pelham and her staff, there is no “gotcha” orientation by the staff.

But the perception persists. Councilman Tom LaBonge’s criticism last July at the confirmation hearing of commission nominee and former Los Angeles Times columnist and editor Bill Boyarsky is typical of elected officials’ take on the situation.

“There’s nothing wrong with what we do!” LaBonge told Boyarsky in council. “And sometimes the Ethics Commission in the past has had a feeling . . . that because we take money it’s bad. But all of us have to ask the public for donations in order to get our message out.”

Boyarsky has joined with Garcetti in challenging the commission staff’s interpretation of the panelists’ role. He rejected city-attorney advice that the state open-meetings law prevents him from asking more than half the City Council members what they think of any particular initiative.

“It’s a stupid rule about not talking to them,” Boyarsky said. “I ignore it. I haven’t talked to seven council members yet, but I talk to as many as I want, and I never count.”

As for being bogged down in small stipulated settlements, Boyarsky said he will refuse to vote for any without enough information from the staff about the underlying offenses. Too much time, he said, is spent on campaign-finance infractions at a time when newspapers are reporting about possible city-contracting fraud.

“How do you focus the staff on bigger problems rather than these small-seeming chickenshit problems?” Boyarsky asked. “I don’t know how you do. I don’t want to signal to Steve [Kaufman] and Collen [McAndrews, another election lawyer] that the commission is easing up.”

Boyarsky acknowledges that the enforcement staff may well be at the very center of probes into civic corruption, but that he — that no one — will ever know what matters were referred to local or federal prosecutors for further action. “We do not try our cases in the press,” Pelham repeatedly reminds commissioners.

The staff’s work on possible money laundering in the case of Casden Properties and some of its subcontractors became public largely because of an appreciative March 30 letter about the staff sent from the current district attorney. The letter hinted, as well, that the ethics staff may be in the thick of other high-profile cases. In fact, a grand-jury transcript notes that the ethics staff helped probe the infamous Entertainment Industry Development Corp. and its president, Cody Cluff, who is now awaiting trial on embezzlement charges.

Some observers of the two former election rivals saw in the letter a subtle jab by Cooley at his predecessor: We know what’s going on, your staff knows what’s going on, but you, Mr. Garcetti, don’t know anything.

To make sure the staff is doing its job properly, past commission presidents have canvassed closed enforcement files and offered critiques on what should have stayed open, what should have been dropped sooner, what other kinds of cases should be pursued in the future.

But Garcetti is now questioning the city attorney’s assertion that he cannot peruse active files, or urge that any particular probe be dropped, without sacrificing the commission’s integrity and independence.

“That’s always been bothersome to me,” Garcetti said of the rule. He notes that it is the commission’s job to set policy and priorities. “How can we do that if we don’t know what they’re involved in?”

Ethics expert Bob Stern applauds Garcetti for his searing review of the commission and its purpose, but he offers a note of caution about the move to get into the staff’s business.

“I’m very concerned about the commission getting involved in investigations,” Stern said. “It’s giving the impression that [Garcetti] wants to be a prosecutor.”

As for Garcetti’s relationship with his councilman son, Stern said there’s nothing to worry about. The younger Garcetti is a first-rate reformer on ethics matters, he said, and wouldn’t hesitate to reject a bad proposal that comes from his father.

 

That leaves other thorny issues about the relationship, even if each Garcetti recuses himself, as promised, from voting on any matter directly related to the other. Any broad policy shift away from zero tolerance on campaign-finance issues gives at least the perception that Eric Garcetti, and his colleagues, will benefit from having the elder Garcetti on the commission.

Any enforcement matter involving Parks would raise eyebrows because of his bitter fight with Garcetti over Rampart. Any possible Ethics Commission action involving PR firm Fleishman Hillard raises questions about involvement by Fleishman vice president Matt Middlebrook, once a Garcetti campaign manager, then a Hahn campaign manager, then Hahn’s point man for two other projects that have come under scrutiny of late: the expansion of Los Angeles International Airport and the fight against Valley secession.

Donors to Garcetti’s 2000 campaign included developers like Nathan Shapell who seek city approval for construction projects; lobbyists like Mark Armbruster, Neil Papiano and Cerrell Associates Inc.; fallen airport and harbor commissioner Leland Wong; and a host of city contractors like Tudor Saliba. Garcetti hired fund-raiser Charlotte Dobbs, and in the financial disclosure he had to file as a city official, he lists a $2,000 gift from Dobbs. One of Dobbs’ most effective lieutenants was Troy Edwards, who eventually left for Hahn’s office and took charge of the Airport, Harbor, and Water & Power departments before resigning during the still-ongoing probe by Cooley’s office and federal prosecutors.

When you place a call to the contact number for Garcetti given out by the Ethics Commission, you get Dobbs’ office.

But to some in the reform community, the most troublesome aspect of Garcetti’s leadership is the private meetings he has had with elected officials and campaign professionals to sound them out about the commission’s work. It’s fine to get their opinions. But some critics wonder what kind of countervailing insights he seeks from the public, which the commission is sworn to protect.

“The commission is not supposed to be [the elected officials’] friend,” one observer says. “They are not supposed to curry favor.”

“I don’t think there are any appearance problems,” Garcetti said. “I was district attorney and I handled cases that involved people I know, and I handled them appropriately, without any conflict. I did it as D.A., and I will do it as president of the Ethics Commission.”

Garcetti’s presence on the commission raises the question whether any former Los Angeles officeholder can serve on the Ethics Commission. If the answer is no, it means the commission is doomed to carry on without the valuable experience and insights of a person who actually has been through the process and understands what candidates and campaign workers deal with to comply with the city’s laws and regulations.

If there is room on the commission for a former pol, what should the public make of that person’s long history of connections with the people he regulates? Boyarsky and other commissioners scoff at the notion, often raised in the panel’s discussions, of “the appearance of impropriety.” The commission is there to deal with real corruption, the argument goes, and not mere appearances. But conflict of interest, and shoring up public confidence, is inherently a matter of appearance.

With Garcetti there is, at least to some extent, a shift in appearance, in large matters, like his relationship with Eric Garcetti, and in smaller matters. Like the way his office telephone is answered.

“Campaign office,” says the voice on the other end of the line.

In the 14-year history of an independent commission charged with scrutinizing and regulating local elections, that is undoubtedly a first.


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