PERSPECTIVE-The Los Angeles City Council’s plan to resolve its dispute over auditing the controversial non-profit trusts gives away the most important element of accountability – independence.
The foundation of good government and good management is a system of checks and balances.
Among other things, the Council’s proposed settlement, which stills needs to be reviewed by IBEW Local 18 (God knows what modifications they will suggest), will force Mayor Garcetti to withdraw his appointments to the boards of the Joint Institutes of Training and Safety and allow the union to have a say in the selection of external auditors to perform future audits.
The mayor’s board appointees are Michael Fleming, who serves on the DWP Commission, and Richard Llewellyn, the mayor’s chief legal adviser. The IBEW has refused to seat them; as a result, the trust boards have not held a meeting since Garcetti announced the appointments last February.
IBEW union boss Brian D’Arcy claims the two would have a conflict of interest owing to their relationship with the mayor – as if the union board appointees are independent?
Los Angeles Superior Court Judge Michael Linfield backed Garcetti in a court ruling in July. He denied the union’s request for arbitration and issued a preliminary injunction allowing Fleming and Llewellyn to be seated. Basically, the mayor and his allies’ interests were compatible with the responsibilities of the non-profit boards.
Now the City Council appears to be willing to give D’Arcy veto power over board appointments. That does not foster independence and transparency.
But wait! D’Arcy will allow the new General Manager of the DWP and another executive of the utility to serve instead.
Well, that’s been a winning combination over the last ten years.
A succession of DWP managers have sat on the boards since the trusts were created.
How much disclosure was provided in that time span?
Virtually zero.
DWP managers are too involved in ongoing affairs with the IBEW to be truly independent. They have to look at D’Arcy’s mug regularly and endure his power-hungry ambitions. They will simply be worn down and cowed into acquiescing with the Boss.
Allowing the union to have a say in the selection of an external auditor also runs counter to independence and transparency. It will mean D’Arcy will influence the scope of the examinations.
Unlike publicly traded corporations who must undergo rigorous audits, more so in the post-Enron era, in the case of the DWP non profits the objectives of an external examination may be more of a review and less of an audit. It is a matter of negotiation. D’Arcy will want it to cover the bare minimum…..and he just might be able to get his way, as he does in many negotiations.
If the City Council caves and pushes this dubious plan forward, a plan that will undoubtedly be watered down in its final version, they will set up the proverbial fox guarding the hen-house scenario.
For D’Arcy, it will taste like chicken.
(Paul Hatfield is a CPA and former NC Valley Village board member and treasurer. He blogs at Village to Village and contributes to CityWatch. He can be reached at: [email protected])
–cw
CityWatch
Vol 12 Issue 67
Pub: Aug 19, 2014