Los Angeles DWP

The front of the headquarters of the Los Angeles Department of Water and Power in downtown Los Angeles. (Richard Vogel / Associated Press)

By Jack Dolan
April 30, 2015

Two nonprofit trusts created by the Los Angeles Department of Water and Power and financed with more than $40 million from ratepayers paid millions to vendors without competitive bids, overpaid top managers and let them charge personal travel, gasoline and other items without filing expense reports, city audits released Thursday showed.

In five years, a handful of trust employees charged more than $660,000 to their publicly financed credit cards for things such as steak dinners and trips to Las Vegas, Hawaii and New Orleans, City Controller Ron Galperin said.

However, Galperin said, auditors did not find evidence of criminal wrongdoing.

One top administrator, who was making about $220,000 a year, used his trust-issued card for more than $30,000 worth of gas between 2010 and 2014, city auditors found.

The release of the audits ended a more than year-long political and legal battle waged against the city by the nonprofits’ top administrators — particularly Brian D’Arcy, head of the city-owned utility’s largest employees’ union — to keep detailed spending records secret.

After blasting the administrators for “cavalier” spending of public money, Galperin called publication of the audit a victory for transparency. “We were fought tooth and nail on this, and we won,” Galperin said.

The records, including thousands of credit card charges, will be posted on the controller’s website.

In a written response Thursday, D’Arcy said Galperin’s audit was “littered with accusatory innuendo and peppered with contradictory statements.” It also failed, he said, to prove that money was spent on anything other than “improving safety and training of the hard-working employees of the DWP” — or that the nonprofits had “violated any laws or regulations.”

While most of the nonprofits’ dozen or so trustees, administrators and employees agreed to be interviewed by the auditors, D’Arcy did not, according to the report.

The nonprofits — which receive roughly $4 million annually in funding from the city — were created in the early 2000s to promote safety and training at the utility. According to a separate
report by City Administrative Officer Miguel Santana, which was also released Thursday, they failed to
provide any “real information on the outcomes or effectiveness” of their programs.

DWP officials have said they spend more than $117million a year on safety and training programs, dwarfing the amount paid to the nonprofits.

The Joint Training Institute and the Joint Safety Institute, as the nonprofits are known, are administered by DWP managers and leaders of the utility’s largest employees’ union.

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