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Bidder Failed to Disclose S. Africa Ties : Contracts: Company is subject of unrelated FBI probe. Anti-apartheid clause is apparently violated by a four- employee shipping office run by a parent firm.


An international construction management firm under FBI investigation for allegedly double-billing several government clients statewide failed to disclose business ties to South Africa when bidding 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 federal fraud investigation, 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, city officials said.

The FBI investigation does not deal with the Los Angeles bid.

Los Angeles, which has one of the toughest anti-apartheid ordinances in the nation, generally forbids the awarding of contracts to companies that do business in or with South Africa, although 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 city analyst who investigates companies' South African ties.

Wolfberg noted that Lehrer McGovern Bovis' parent company with South African ties--Peninsular & 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 a 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.

City public works officials have 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 work quality or is in the best interest of the city.

The city Board of Public Works made that recommendation for Lehrer McGovern Bovis, which is the nation's second-largest construction management firm and oversaw construction of Euro Disney 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."

But last week, the City Council's Governmental Efficiency Committee delayed a vote on the firm's contract, directing Wolfberg to analyze the company's South African connections and to explore whether the company lied in its affidavit.

Since then, investigators from the FBI and the Ventura County district attorney's office have served federal search warrants as part of an investigation into suspected systematic fraudulent billing by the company.

The investigation focuses on possible double-billing of clients for projects ranging from a $64-million performing arts center in Thousand Oaks to a new federal courthouse in San Francisco, sources said.

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