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Firm Failed to Tell of Ties to South Africa : Thousand Oaks: The company supervising the Civic Arts Plaza project is also overseeing City Hall renovation downtown.

July 28, 1993|DARYL KELLEY | TIMES STAFF WRITER

An international construction management firm suspected by the FBI of double-billing the city of Thousand Oaks failed to disclose business ties to South Africa when applying to oversee the $92-million renovation of Los Angeles City Hall, officials said Tuesday.

Lehrer McGovern Bovis, whose Los Angeles and Thousand Oaks offices were searched last week as part of a broad fraud probe, declared in March that it does no business in South Africa. But the company acknowledged after complaints from competitors that a parent corporation has an office in South Africa, Los Angeles city officials said.

Although Thousand Oaks has no anti-apartheid ordinance, Councilwoman Elois Zeanah said Tuesday that the company's erroneous Los Angeles affidavit creates even more concern about the New York-based company, which is supervising construction of the $64-million Civic Arts Plaza.

"It does concern me," Zeanah said. "It makes me even more sensitized to the process of selecting contractors. Right now we just take the lowest bidder, but perhaps other concerns are equally important."

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Zeanah said she supports changes in city contracting procedures that would penalize companies that demonstrate an ethical breach while working for the city.

Councilman Frank Schillo, however, said city officials need to judge Lehrer McGovern Bovis based on its work for Thousand Oaks.

"We have to deal with these people on the basis of what they're doing with us and for us rather than on what they're doing anywhere else," said Schillo, who made the initial motion to hire the firm in 1989.

"I've checked everyone I know on the staff, and nobody has any problem with the way they're operating here," he said. "They're saving us money and they're doing a good job."

Costs for the new performing arts center are under budget, Schillo said. Lehrer McGovern Bovis has contracts valued at $4 million to $5 million to supervise the work, he said.

In Los Angeles, city officials said the inquiries by the FBI and Ventura County district attorney into suspected fraudulent billing by Lehrer McGovern Bovis, along with the company's South African ties, have prompted a second look at the firm.

The Los Angeles City Council's Governmental Efficiency Committee delayed a vote last week on the company's City Hall renovation contract, instead directing a city analyst to study the company's South African connections and explore whether officials lied in the affidavit.

Los Angeles, which has one of the toughest anti-apartheid ordinances in the nation, generally forbids awarding contracts to companies that do business either in or with South Africa, though exceptions have been made by the City Council.

The ordinance requires that bidders, after "diligent inquiry," sign an affidavit declaring any business connections with South Africa by the company and its subsidiaries and parent companies.

"These guys said they thought all the city cares about is the next guy up the (corporate) ladder. They just took a narrow view of the definition of a parent," said George Wolfberg, a top L.A. city analyst who investigates companies' South African ties.

Wolfberg said the Lehrer McGovern Bovis parent company with South African ties--Peninsular and Oriental Steam Navigation Co. of London--is nine layers removed in the corporate structure.

Joseph Scarano, president of the company's regional operations in Los Angeles, said Friday that his office never intentionally misled the city.

"It's a natural mistake," Scarano said. "We never ever considered P & O as a parent because it's so far removed. . . . We have no day-to-day, week-to-week or year-to-year contact with P & O. It seems like a very distant relative."

Wolfberg, who is preparing a report on the issue for the City Council committee, said he has concluded that Lehrer McGovern Bovis had no prior knowledge of the parent company's four-employee shipping operation in South Africa.

"I don't believe they knew," Wolfberg said.

Despite its South African ties, city public works officials rated Lehrer McGovern Bovis first among 12 bidders for the Los Angeles City Hall project, and have negotiated a tentative $3-million contract with the company to manage the building's seismic and historical upgrade.

City contracts can be awarded to companies with South African ties if the City Council finds the exception is necessary to maintain high work quality or is in the best interest of the city.

The city Board of Public Works made both findings for Lehrer McGovern Bovis, which is the nation's second-largest construction management firm and supervised construction of EuroDisney in Paris and the renovation of the Statue of Liberty.

"We want to move forward and seek an exemption to the South African ordinance," said Bill Holland, principal architect for the city Bureau of Engineering. "The quality of their work has been demonstrated."

Investigators from the FBI and the Ventura County district attorney's office served search warrants Wednesday as part of an inquiry into possible double-billing of clients for projects ranging from the Thousand Oaks arts plaza to a new federal courthouse in San Francisco, sources said.

The suspected fraud involves millions of dollars in bills for work on at least four projects in California, including the $83-million U. S. 9th Circuit Court of Appeals courthouse renovation in San Francisco and a $187-million expansion at UCLA, sources said.

The company also managed construction at Thousand Oaks' municipal service center, where vehicles are repaired, and a land-grading job for the Calleguas Municipal Water District.

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