News that a close affiliate of the company managing the Los Angeles Unified School District's massive bond construction program has been fined for laundering campaign contributions brought demands Wednesday for the district to hire an independent inspector general to investigate such problems.
"It's time for the superintendent to get an inspector general in place, and one of their first jobs ought to be to look at this issue," said Timothy Lynch, Los Angeles' deputy city controller and a member of a citizens committee that is overseeing the expenditure of the $2.4-billion bond fund.
Lacking that impartial judge, the district faces the complex task of determining whether O'Brien Kreitzberg Inc. told the truth when it checked the "no" box on a qualification form designed to uncover whether it was the subject of any investigations of wrongdoing.
The firm maintains its "no" answer was truthful because the company has been reconfigured since 1994, when the $15,571 in illegal contributions were made to officials of a variety of public agencies.
However, many of the principals remain, causing critics to suggest that such a response is legal sleight of hand--especially since the former company's work history helped the new company gain the top bond post.
"Reslicing salami, you still have salami," said state Sen. Tom Hayden (D-Los Angeles), who advocated Wednesday that all bond work be halted until an inspector general is hired and a full investigation is completed.
The timing of the disclosure--putting the Proposition BB management under a cloud just as pressure is mounting to pick up the pace of construction--creates a political quandary for the district:
Should it retain O'Brien Kreitzberg and risk a further erosion of public confidence in the district's ability to manage the voter-approved bond money? Or should it fire the firm, delaying the district's best hope of restoring that confidence through visible repairs at schools across the city?
"It's an ugly choice," board member David Tokofsky said.
Proposition BB--the largest local school bond in U.S. history--was approved overwhelmingly by voters in April to repair long-damaged campuses and build new facilities. The measure included creation of an oversight committee.
The committee's chairman, Steven Soboroff, said Wednesday that the timing of the O'Brien Kreitzberg disclosures could not be worse. After months of setting up the network of project managers who will subcontract the work, the district is poised to begin major renovations at more than 400 campuses.
Although Soboroff expressed concern that the inspector general could "add another layer," he said he would support any truly independent evaluation.
"If something like this were to happen again, it would be our responsibility for overlooking it the first time," he said.
The pressure to hire an inspector general and the questionnaire at the center of the current controversy both grew out of concerns raised by Tokofsky and Hayden about myriad links between construction companies bidding on the school district work and those previously involved in controversies at the Metropolitan Transportation Authority.
A Hayden bill awaiting Gov. Pete Wilson's signature provides that the district "shall not contract or do business with any firm that knowingly provides false information."
But Hayden withdrew the bill's requirement that the district hire an inspector general, similar to the one employed by the MTA, after Supt. Ruben Zacarias agreed in mid-July to follow that advice voluntarily.
Zacarias said Wednesday that he had been planning to appoint an inspector general once a source of funding was identified, either from the Legislature or by school board action. Now, aware no state money is forthcoming, he will urge the board to allocate the funds, he said.
District General Counsel Richard Mason said he was looking into the FPPC matter but wanted to give O'Brien Kreitzberg an opportunity to respond before reaching any conclusions.
"The question is: Was their answer to this questionnaire honest and forthright?" Mason said. "If it was not forthright, then what does that mean for the district?"
The FPPC agreement was reached earlier this month after an investigation involving 23 contributions made from 1993 to 1995 by individual employees of O'Brien Kreitzberg & Associates Inc. The employees were reimbursed by the company through their expense accounts.
Public officials and campaigns in Los Angeles, Long Beach, San Diego and the San Francisco Bay Area received the money, including members of the MTA board who ultimately selected another company for the Eastside subway project the firm was seeking. The company maintained that it was not intending to influence decision makers; it said that until it began cooperating with the FPPC in March 1996, it did not know that reimbursing employees violated state law.