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$1.28 Million in Lost Items 'Stored' There : RTD Ghost Story: a Phantom Warehouse

March 18, 1987|RICH CONNELL and TRACY WOOD | Times Staff Writers

The financially troubled Southern California Rapid Transit District has created a phantom warehouse to "store" more than $1 million in lost, stolen or misplaced bus parts, RTD employees have told The Times.

The dummy warehouse, as some RTD employees also call it, was devised nearly a year ago and exists only in the RTD's computers--a kind of accounting limbo for lost materials that at other transit agencies are promptly acknowledged and written off as losses. RTD workers charged that the ghost warehouse, labeled "SD14," is symptomatic of management efforts to hide mistakes with little regard for public cost.

"It makes (RTD middle managers) look good to higher ups. . . . You're not losing as much money on paper," said one warehouse employee familiar with the system.

John Richeson, RTD's assistant general manager, the district's overseer of inventory, said he learned of the non-existent warehouse only last week as a result of inquiries by The Times. However, he defended the bookkeeping maneuver as a good idea for handling "inventory that is not in the location it is supposed to be."

RTD managers acknowledged that the non-existent warehouse is an unusual bookkeeping procedure, but they insisted that it is neither improper nor deceptive. Richeson said that to characterize the district as hiding its inability to control inventory is "not the proper interpretation."

The list of missing parts in the phantom warehouse has grown from zero nearly a year ago to more than 500,000 items worth $1.28 million as of last week, the equivalent of about 6% of the RTD's $22.2 million in bus and office supplies on hand. RTD officials said that hunting down the missing supplies and trying to determine how much has been stolen and how much has been misplaced has been a low priority because the search would be too expensive and time consuming.

"The dollar value certainly is not substantial in terms of the overall inventory or the overall volume of things we are doing," Richeson said.

However, The fuzzy status of materials moved to the non-existent stock area creates other problems. It is now more difficult for transit police investigators to know quickly when parts are truly missing and possibly stolen, said RTD Police Chief James Burgess.

"That's one of the problems we do encounter with this system," he said.

One investigation of stolen bus parts is under way by transit police, and there have been several past instances of pilferage traced to employees that have resulted in prosecutions and dismissals. An investigation a few years ago found that employees were stealing heavy-duty bus hydraulic systems for use in customizing suspension systems on "low-rider" cars, Burgess said.

Officials contend that most of the missing material should turn up during the move to a new, much-delayed $87-million maintenance and warehouse facility this spring.

RTD managers inserted the phantom warehouse into the district records after a systemwide inventory of bus parts was taken last April. The inventory supposedly produced a complete tally of RTD bus and office supplies, from which accurate computer records of parts on hand were produced for the first time.

However, several sources familiar with warehouse operations said the inventory served mainly to reveal the lax controls on parts and supplies.

"It was a complete disaster," said one, explaining that a lot of material listed in inventories could not be found.

In other instances, RTD officials acknowledged, inventories that were on hand may have been overvalued.

"The inventory was meaningless," said another source who participated in the inventory.

Calculated Losses

RTD officials claimed that the value of the missing parts they found in the course of conducting the inventory was $1 million greater than the calculated losses. However, officials said in interviews with The Times that they were unable to explain how they arrived at that figure, saying no supporting records were kept of the intensive, four-day inventory check.

Almost immediately after the inventory adjustments were made to the books, parts began disappearing again, causing new problems.

A computer system that is supposed to automatically replenish parts when they are needed began refusing to place some orders. Since disappearing parts were not being removed from inventory lists, the computer showed the district had those parts on hand. But stock clerks checking the shelves were unable to find them.

Faced with a parts-purchasing bottleneck that could sideline badly needed buses, district employees began making expensive rush orders for special overnight deliveries from manufacturers.

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