Vol. 22, No. 5,514 - The American Reporter - September 7, 2016



by Robert Gelfand
American Reporter Correspondent
San Pedro, Calif
November 22, 2004
On Media
THE CONTROLLER AND THE TIMES NAIL L.A.'s MAYOR

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LOS ANGELES, Nov. 22 -- In exposing a government scandal, it sure helps when a zealous public official and a big-city newspaper manage to find each other. Such is now the case in Los Angeles, where the Los Angeles Times and City Controller Laura Chick have been playing tag-team against Mayor James Hahn.

Other targets include the city's Department of Water and Power (DWP) and the public relations firm Fleishman-Hillard, but their role is only to be the supporting actors in the morality-play that Chick and the Times are producing.

When Hahn took office as mayor of Los Angeles in 2001, it seemed like his term would be clean, even if a bit pedestrian. Now, questions about the mayor and several of his current and former appointees are beginning to build, and as they build, they are beginning to sting.

It has taken a while to come out. For the past year things have been as murky as the opening shots in a 1930s detective movie. We have witnessed the resignation of a vice-mayor, a grand jury investigation that somehow involves the Airport and the Harbor Department and the resignation of two politically-connected Airport Commission members.

The picture is beginning to become clear. It all seems to come down to that oldest story in politics, the use of influence by incumbents for the purpose of fundraising and their abuse of power in order to get reelected.

The first part of the story has, as its context, the issue that became known as "valley secession." The San Fernando Valley is the northern part of the city of Los Angeles. Many valley residents, resentful over downtown control, supported a 2002 ballot measure that would have allowed them to break off and become a separate city. This fight had been building since the time Richard Riordan was mayor. Hahn inherited the problem when he took office in 2001. Determined not to lose the northern half of his city, Hahn argued, cajoled, and raised money to fight off the secessionists. That created the first part of the scandal.

Contractors have claimed that they were told to make sizable contributions to the mayor's anti-secession campaign and if they refused, they would not be allowed to do business with the city. It became known as the "pay to play" scandal.

The Times ran an expose quoting one contractor who claimed that his firm refused to donate to the anti-secession campaign and, he argued, were rejected on an airport construction contract application because of it. Whatever the ultimate truth of the matter, charges accumulated and the newspaper stories revealed more and more of the "pay to play" atmosphere that was prevalent. The Hahn appointee closest to the action, Vice-Mayor Troy Edwards, resigned, as did two wealthy and politically connected airport commissioners.

City Controller Laura Chick now enters our discussion. In this city, the controller has the power to do audits of city departments. There is little other power or authority, but Chick has been exercising what she does have to the limits.

Early on, she presented audit findings that called into question the contract-awarding practices of the Airport and the Harbor Department. Without revealing what, if any, criminal violations she might have found, she announced that she was turning her findings over to the legal authorities with the clear implication that they were supposed to indict somebody.

The Times and, to a certain extent the harbor's local newspaper the Daily Breeze jumped on the "pay to play" story for all it was worth. The Breeze has reported as, one after the other, Harbor Department employees have gone before a grand jury.

Now, the new scandal is unfolding.

The story has been developing over the past week. Beginning with an article by Patrick McGreevy on Nov. 17 and continuing with investigative stories by Noam N. Levey on Nov. 19 and Nov. 20, the Times has been nailing James Hahn's hide to the barn door. To understand the symbiotic relationship that has been developing between controller Chick and the Times, we need only follow the stories as they developed over the past few days.

The Nov. 17 story is headlined "L.A. Utility Overbilled by $4.2 Million, Audit Says." The opening paragraph sums it up: "Public relations firm Fleishman-Hillard overcharged the Los Angeles Department of Water and Power by $4.2 million through "unsubstantiated, unsupported and questionable" billings, the city controller said in an audit released Tuesday." (The DWP hired Fleishman-Hillard in 1998 when it appeared that they might be faced with state-mandated deregulation. It never happened, but the Fleishman-Hillard relationship continued, to the tune of $24 million between 1998 and the present.)

Both controller Chick and the Times have been working on this story for months, but its connection to the mayor was not originally obvious.

In the beginning, it was nothing but the old story of a business doing a little profiteering from a juicy government contract. Fleishman-Hillard was overcharging - even they admit to some part of it - but the mayor claimed not to have been associated with it.

The Nov. 19 story in the Times tells it differently. The headline gives us a clue: "Firm's Efforts for Hahn Sizable." The article explains how the Hahn administration has taken over control of the Fleishman-Hillard relationship with DWP and has used Fleishman to burnish the mayor's image, all the while doing so at DWP rate-payers' expense.

The story reminds us that Mayor Hahn pretended innocence in response to earlier warnings about Fleishman-Hillard abuses. It then pins the blame squarely on him:

"Somebody who was supposed to be watching over this contract obviously was not reviewing these bills," Hahn said when evidence of the overbilling was first disclosed by The Times in July.

But a review of thousands of pages of public records, as well as interviews with former Fleishman employees, indicates that Hahn's office not only monitored the contract, it asked for monthly reports on Fleishman's work.

"The mayor essentially treated us as an adjunct to his press office," said one former Fleishman employee. Two others said Hahn's deputies made clear that the mayor's office was the real client.

All three asked not to be identified out of fear that their careers would be jeopardized.

The mayor has his own five-person press office, which currently has an annual budget of about $300,000.

In five short paragraphs, the story suggests that Hahn has been lying, links the misuse of publicly funded Fleishman-Hillard activities to Hahn's reelection campaign, and points out that the taxpayers have already funded a government press office for the mayor's legitimate uses.

The story details another case involving the mayor's trip to Asia. "Yet the DWP was charged more than $160,000 as Fleishman employees traveled with the mayor, briefed him on local protocols, set up news conferences and meetings for him, and ensured that news of his accomplishments was disseminated on two continents."

The story explains the close relationship that Hahn's administration forged with Fleishman-Hillard. In effect, a contractual relationship that had some public benefits at its 1998 inception was later hijacked by the Hahn administration for its own partisan purposes:

The department hired Fleishman-Hillard in 1998, when Richard Riordan was mayor. The firm was supposed to help improve the DWP's image as the utility prepared to face competition for customers when the California energy market was deregulated.

Fleishman performed millions of dollars of work for the DWP that had nothing to do with the mayor's office, including designing and managing the utility's $750,000-a-year corporate sponsorship of the Dodgers.

But when Hahn took office in 2001, Fleishman began assiduously cultivating a relationship with the mayor and his top aides, in part with extensive pro bono work, according to e-mails and interviews with former Fleishman employees.

That strategy was the brainchild of Douglas R. Dowie, the brash ex-Marine and former newspaper editor who headed Fleishman's Los Angeles office, the former employees said.

Laura Chick reenters the fray: The very next day, Nov. 20, the Times ran an article headlined, "Mayor's Use of PR Firm Criticized." The article quotes the controller on the Fleishman-Hillard story: "This is a very sad day for the city of Los Angeles,' Chick said after the Times reported that, in 2002 and 2003, Fleishman billed the DWP more than $400,000 to arrange news conferences and press releases featuring Hahn and to provide other PR services to the mayor."

The cooperative relationship between controller Chick and the Times, whether intentional or not, becomes clear as we consider the sequence - Chick releases a report, the Times writes about it, Chick responds to the Times story. We have seen some variation on this theme at least twice now, first in regard to the "pay to play" story and now with the Fleishman scandal.

Other news sources have gotten an oar in these waters as well. David Zahniser of Copley News Service (published locally here in the Daily Breeze) provides a more local perspective to harbor issues, while www.laobserved.com has been covering the news-business end of things.

In each case, the news media report on the grand jury subpoenas, quote the controller's reports, and develop their own findings. Controller Chick has been adept at using the news media to present her findings to the public and, in so doing, to create added legitimacy for her activities.

Scientists and engineers recognize the self-reinforcing nature of certain phenomena, referring to positive feedback loops and resonance. What we have going here is something analogous. Unlike the situation where prosecutors and the news media create a frenzy to subvert the justice system, what has been going on here appears to be developing in the public interest and for the public good.

Copyright 2016 Joe Shea The American Reporter. All Rights Reserved.

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