Metropolitan News-Enterprise


Friday, October 23, 2015


Page 1


C.A. Upholds City Audits of DWP Union Trusts


By a MetNews Staff Writer


The Los Angeles city controller has the right to conduct annual audits of two trusts funded by the ratepayers of the Los Angeles Department of Water and Power, the Court of Appeal for this district ruled yesterday.

The audits are specifically provided for in the trust instruments, Justice Nora Manella said in an unpublished opinion for Div. Four.

The trusts were created by the DWP and Local 18 of the International Brotherhood of Electrical Workers, which agreed in collective bargaining to set up the nonprofits in order to improve worker safety and training. The department and the union each appoint an equal number of trustees.

City Controller Ronald Galperin announced that he intended to audit the trusts on Sept. 20, 2013, the day after a Los Angeles Times story appeared questioning the way the trusts spent ratepayer money. Galperin’s auditors found the nonprofits had paid millions of dollars to vendors without competitive bids, overpaid top managers, and let them charge more than $660,000 to publicly financed credit cards for things such as steak dinners and trips to Las Vegas, Hawaii and New Orleans.

The union trustees challenged the controller’s right to conduct the audits, and sought to quash subpoenas issued by his office. Los Angeles Superior Court Judge James Chalfant ruled that the controller had the right under the Los Angeles City Charter to conduct the audits, rejecting the union position that the audits could only be conducted by a firm hired under the collective bargaining agreement.

Interpreting the trust agreements in light of their “primary purpose,” Manella wrote, leads to the conclusion that “each trustor [may] require one audit per year by an independent certified public accounting firm or the Controller.”

City Attorney Mike Feuer called the ruling “a major victory for transparency and openness in city government.”

He said in a release:

“Today, our Office has vindicated a critical right of the ratepayers of the Los Angeles’ Department of Water and Power:  to know how over $40 million of their money has been spent by the two DWP-IBEW Trusts.  We are certain that the audit of these Trusts by City Controller Ron Galperin will finally guarantee the ratepayers the transparency they deserve.”

Galperin commented, also in a release:

“The Court of Appeal’s decision is an important victory for transparency, accountability and the simple notion that anyone who receives public funds must account for their use of those funds. The Appeals Court acted just as the previous court did, affirming my authority as Controller to audit these two DWP trusts.”

Robert Gerstein, the appellate lawyer for the union, said he could not comment without talking to trial counsel.

The case is D’Arcy v. Galperin, B256016.


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