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Firm Under Cloud Gets $33-Million Airport Pact

Judge said Tutor-Saliba, a major donor to Mayor Hahn, submitted false claims on MTA work.

January 22, 2003|Jeffrey L. Rabin and Ted Rohrlich | Times Staff Writers

The administration of Mayor James K. Hahn awarded a $33-million airport construction contract Tuesday to a firm that Hahn, as city attorney, helped block from a city project because of concerns about its business practices.

Since the actions of Hahn's city attorney's office two years ago, the firm, Tutor-Saliba, was found by a Superior Court judge to have submitted false claims to the Metropolitan Transportation Authority. The company also became a major financial backer of Hahn's political campaigns.

Hahn administration officials denied any connection between campaign contributions and the contract award. "This decision was truly staff-driven," said Airport Commission President Ted Stein, himself a major Hahn fund-raiser.

A spokeswoman for the mayor, who was in Washington, said he was unavailable, but he issued a statement saying Tutor-Saliba is a firm with "a solid record."

Tuesday's unanimous decision to award Tutor-Saliba the construction contract for an airport parking garage and bus shuttle terminal in Van Nuys represented a dramatic turnaround.

As recently as September, airport staff members prepared a draft letter to Ronald N. Tutor, company president, warning that because of the MTA case he faced disqualification as a "non-responsible contractor."

Tutor-Saliba became notorious in the early 1990s for installing less than the required 12 inches of concrete in parts of subway tunnels in downtown Los Angeles. It was later required to make repairs.

The firm's troubles with the city started 2 1/2 years ago. It withdrew from competition for a $250-million sewer construction project after the Department of Public Works and the city attorney's office, then headed by Hahn, raised questions about its fitness.

The firm's lawyer appealed in October 2000 to Timothy McOsker, then Hahn's chief deputy in the city attorney's office and now his chief of staff. But city officials stuck by a decision requiring that Tutor-Saliba prove its fitness at a hearing, and the firm withdrew. McOsker did not respond to a call to his office Tuesday.

Tutor-Saliba suffered another setback in July 2001, when Los Angeles Superior Court Judge Joseph Kalin terminated the company's lawsuit against the MTA in mid-trial.

The construction company, which was the largest contractor on the Los Angeles subway, said it had been underpaid for construction of three subway stations along Wilshire Boulevard.

But the judge ruled that the firm so misused the judicial process it did not deserve a jury's decision. "There has been intentional withholding, concealment and destruction of documents by [Tutor-Saliba] and its attorneys," Kalin wrote.

He allowed an MTA countersuit against Tutor-Saliba to proceed, ruling that the firm owed the agency money but leaving it to a jury to decide how much.

Jurors decided that Tutor-Saliba should pay the MTA $29.5 million for submitting false claims for payment and using fronts posing as minority contractors to meet its minority contracting goals. With lawyer fees and other awards, Tutor-Saliba's debt came to $63 million, court records show. The company has appealed.

By the time of the verdict, the Sylmar-based firm had become a major financial backer of Hahn, then locked in a campaign for mayor against former Assembly Speaker Antonio Villaraigosa. Records show that Tutor, his employees and their spouses have given $39,000 to Hahn since early 1999, most of it in a May 2001 fund-raiser hosted by Tutor himself. The same month, records show, Tutor also paid $75,000 for an independently produced mailer that criticized Hahn's opponent.

Last year, records show, Tutor-Saliba contributed $100,000 to a Hahn-led effort to defeat San Fernando Valley secession, making the firm one of the largest donors to that campaign. Stein, the Airport Commission president, was a major anti-secession fund-raiser, although he said in an interview Tuesday that he had no role in soliciting Tutor's contributions.

The airport contract Tutor-Saliba won Tuesday is to build a parking garage and a shuttle bus terminal that Los Angeles International Airport-bound travelers can use near city-owned Van Nuys Airport. Tutor-Saliba was the low bidder for the Flyaway Bus Terminal contract.

Even so, the adverse verdict in the MTA case threatened the firm's effort to obtain the job. Airport staff members prepared their letter in September warning Tutor-Saliba that it faced possible disqualification, but that letter was never sent.

Instead, the staffers wrote in an internal report, they conferred with two lawyers in the office of City Atty. Rocky Delgadillo, who told them that the MTA judgment was still on appeal and that it might be overturned. "They also advised that the Board of Airport Commissioners was not compelled to act upon a matter which is currently under appeal," the staff wrote.

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