P.R. Abuses at LADWP Should not have been a surprise

Ratepayers in the City of Los Angeles must wonder just how badly they have been bilked over time by the agency which has apparently been left un-managed for the last four years. The Daily News is reporting that abuses by public relations contrctors at the Los Angeles Department of Water and Power should have surprised no one. They knew about it two years earlier:

Los Angeles Department of Water and Power auditors reported finding more than $350,000 in overbillings by two public-relations firms as early as 2002, but their warnings were ignored by utility managers who renewed their contracts worth more than $5 million a year, the Daily News has learned.

According to interviews and documents released under the California Public Records Act, DWP officials missed a critical chance to root out abuses discovered by their own auditors before they became swept up in the "pay-to-play" scandal that has engulfed Mayor James Hahn's administration. The contracts were only terminated earlier this year after City Controller Laura Chick began assailing them as part of her audit that accused the public-relations firm Fleishman-Hillard Inc. of $4.2 million in DWP overbillings.

Back in November 2002, DWP internal audits questioned the legitimacy of $300,000 in billings by Fleishman-Hillard and $52,000 in charges by the Lee Andrews Group. The two politically connected firms were consulting the DWP under contracts that gave Fleishman-Hillard $3 million a year and Lee Andrews $2.4 million a year -- contracts that were renewed after their billings were questioned.

"It appears that (the internal audit) was ignored," said Michael deCastro, a private auditor whose firm, Thompson, Cobb, Bazilio & Associates, was hired by Chick to scrutinize Fleishman-Hillard bills.

Admittedly, DWP did catch some over-billing:

According to e-mails and other internal documents released under a California Public Records Act request, records show that Department of Water and Power auditors repeatedly questioned bills from Fleishman-Hillard Inc. and the Lee Andrews Group, both in formal audits and in written questions to top DWP managers.

In one case, Fleishman-Hillard withdrew $288 in billings for liquor, wine and beer served at a June 2000 dinner meeting at the City Club on Bunker Hill. It was hosted by David Freeman, then the DWP's general manager, to promote his Integrated Resource Plan.

You'd have to hope that DWP management was drinking some of that booze when they overlooked the millions more they were bilked out of over time!