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Where’s the DWP’s $12 million

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.”

Interesting words from a man who, many veterans of the DWP and City Hall say, gave D’Arcy the keys to the store. More so, given that DWP insiders say Freeman could be the next president of the Board of Water and Power Commissioners if Villaraigosa defeats Hahn on May 17. But Freeman, 79, didn’t elaborate at the time about how he’ll be spending his golden years. “If you’ll pardon me I’ve got to go see my good buddy Antonio,” he said, as he ambled into the throng at the Henry Fonda Theater.

Freeman claims he battled D’Arcy more than folks realize while at the helm of the DWP, from 1997 to 2001. But that wasn’t the case with a generously funded safety institute under Local 18’s control that meets in secret with no oversight from the DWP or the City Council, or with the oddly similar training institute later spawned under a new general manager — a perhaps not-so-tidy pair of enterprises that the City Attorney’s Office once characterized as “an unlawful gift of public funds” in urging compliance with the Brown Act, California’s open-meetings law.

Still, Freeman seems to understand why some might question two union-controlled entities endowed with $12 million in public funds under no public scrutiny in spite of two separate opinions from the city’s own lawyers. To say nothing of Local 18’s end run around the City Attorney’s Office in the form of a call to former state Senator John Burton, which prompted a more labor-friendly opinion from the Attorney General’s Office. “I agree the decision was made early on to hold private meetings, but it ought to be open,” Freeman conceded in retrospect. “I’m a fan of open government.”

On Tuesday, City Attorney Rocky Delgadillo’s office, ecstatic about a $5.74 million settlement that public-relations firm Fleishman-Hillard agreed to pay the DWP and other city agencies to end a lawsuit alleging overbilling, abandoned the advice of his own lawyers in favor of secrecy for Local 18. “This office looks to the Attorney General with respect to matters of state law,” a spokesman said. Delgadillo’s representatives refused to comment on the two previous written opinions of its own lawyers.

Secrecy is only the tip of the iceberg, however. DWP veterans, City Hall insiders and legal experts doubt the legitimacy of what an employee at the DWP calls “every bit the boondoggle it was intended to be.” Says another, who claims the DWP has a poor reputation in its core industries for controlling injuries and accidents, “Local 18 assumes no risk or responsibility for worker safety yet receives all the benefits, at public expense. They are eating the department from the inside out.”

No one in City Hall, including Hahn and Villaraigosa, has asked what union bosses have done with $12 million in public funds since 2000. DWP insiders say the two institutes were fallow for years until a recent flurry of activity. The Weekly has filed a California Public Records Act request that Local 18’s lawyer has rejected and the DWP is still considering. Veteran city employees say the DWP frequently struggles to answer basic questions about how they track workplace injuries. An audit by the Department of Insurance is expected to produce harsh findings regarding the DWP’s compliance with workers’-compensation laws. A veteran member of Local 18 says the safety institute “holds its little safety classes, then throws a barbecue for 300 people at Griffith Park,” in an effort to look like it is doing something.



The institutes got their start in rough financial times for the DWP. Freeman and his right-hand man Raman Raj, an assistant vice president later fired from the DWP following allegations of union interference in labor-relations matters, and D’Arcy and his right-hand man, Local 18 President Frank Miramontes, agreed on August 31, 2000, to amend the Memorandum of Understanding between Local 18 and the DWP. They created the Joint Safety Institute (JSI), an “independent body” with equal representation from labor and management aimed at “promoting open communication and mutual trust and respect on issues of health and safety.” Freeman denies there was a quid pro quo related to the DWP’s 1998 staff reductions of 2,000 workers. Nevertheless D’Arcy was allowed to handpick the JSI’s management-side representatives. Independent in name only, the JSI, which is represented by Local 18’s lawyer, was approved by the City Council and funded by the DWP to the tune of $1.2 million per year.

A nice chunk of change, but there was a hitch: A legal memorandum to Raj from Assistant City Attorney Terso Rosales dated May 19, 2000, had expressed “valid concerns” about “how and within what parameters JSI will operate.” In his six-page legal analysis Rosales wrote that worker safety is a core value, and authority for overseeing it “must be validly delegated” by the DWP. He pointed to the JSI’s authority to hire and fire employees, purchase goods and services and invest and spend public funds, and concluded the JSI was required to hold open meetings under the Brown Act. “If so [delegated] JSI is a legislative body under the [Brown] Act,” Rosales wrote. “If not, the entire transaction fails and results in an unlawful gift of $1.2 million in public funds.”

The memo, a copy of which the Weekly obtained through a public-records request, was copied to then–City Attorney Jim Hahn’s chief of staff Tim McOsker, and to then–Assistant City Attorney Thomas Hokinson, the former head of legal operations at the DWP whom Hahn later elevated to assistant general manager. Local 18 had other ideas about how to run the JSI. Public accountability was not one of them. Characterizing the JSI as a result of collective bargaining, Local 18 attorney Robert Dohrmann wrote a letter to D’Arcy stating that the DWP had vested no authority in the JSI. Dohrmann advised D’Arcy that the DWP assumed all risks regarding worker safety and that the JSI is exempt from the Brown Act.

Meantime, Freeman ended his four-year tenure at the DWP. His successor, former DWP general manager David Wiggs, was just as deferential to Local 18, however. In 2002, after a second legal memorandum urging compliance with the Brown Act, this time from then–head of legal operations at the DWP, former Assistant City Attorney Phil Shiner, a second institute was created under the same rationale. The Joint Training Institute (JTI) was created to “advise the DWP with regard to training and personal growth to enhance employee development and satisfaction.” The JTI, endowed with $6 million of DWP money from the get-go, also invoked the mantra of “mutual trust and respect” between labor and management.

Again, Dohrmann fired off a letter to D’Arcy reiterating his previous advice, and advising his client that the City Council, despite its approval of both entities, including recommendations regarding the creation of the JTI, has no right to review the activities of either entity under the City Charter. Then, Local 18 looked north for assistance.

In 2003, Local 18 called its lobbyist in Sacramento, Art Carter of the firm Carter, Wetch and Associates, who placed a call to then–State Senate President Pro Tem John Burton, who requested that Attorney General Bill Lockyer issue a legal opinion. The JSI and the JTI had continued to meet in private, despite the two directives from the City Attorney’s Office, which along with the DWP had become emasculated by Local 18.

Burton’s request to Lockyer, on March 4, 2003, framed the issue much as Local 18’s lawyer had. Burton signed it “Peace and friendship” for good measure. A year later, on February 24, 2004, Lockyer’s office released a non-binding advisory opinion that sided with Local 18’s desire to meet in private — even after consulting the attorney general’s in-house Brown Act expert, Ted Prim. By then the JSI and the JTI, which are housed in a facility they lease at the Valley Generating Station in Sun Valley, were vested with more than $10 million in public funds with no oversight from any elected official or manager at the DWP, aside from D’Arcy’s handpicked representatives. Burton did not return calls for comment.

Hahn chief of staff Tim McOsker would not comment on whether Hahn had any concerns about the $12 million in public funds controlled by the JSI and the JTI. Councilman Antonio Villaraigosa and Councilman Tony Cardenas, chair of the Commerce, Energy and Natural Resources Committee, did not return calls for comment. City Controller Laura Chick, who has focused heavily on improprieties in the Hahn administration, did not return calls for comment.

Asked about his desire to come back to the DWP, Freeman denied that he has talked with Villaraigosa, who is leading Hahn by double digits. “I don’t want to jinx anything,” he said of the likelihood he could be tapped should Villaraigosa become mayor. “Where I come from you don’t talk about something until you’ve got it.”?


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