LOS ANGELES (December 14, 2021)– The Los Angeles Department of Water and Power’s Board of Commissioners on Monday voted to seek authorization from the Los Angeles City Attorney to hire independent counsel due to apparent conflicts of interest involving city lawyers that have been exposed during an ongoing federal investigation into the handling of a ratepayer class action lawsuit brought against LADWP.
The Board of Water and Power Commissioners voted to transmit a letter to City Attorney Mike Feuer formally requesting his office’s authorization to enable the department to engage independent attorneys to represent the department on legal matters currently under investigation by federal authorities to resolve conflicts of interest that may exist and that must be remedied to protect the department and its ratepayers. The Board’s two-page letter, sent Monday afternoon, also requested the removal of three assistant city attorneys from their present role as legal representatives of the department based on the findings of a Special Master Report. The Board’s actions were taken during a closed session special meeting.
LADWP Board of Commissioners President Cynthia McClain-Hill said, “The Board of Commissioners must have complete confidence in the legal advice and recommendations it receives from the lawyers engaged to protect and defend the interests of the LADWP and its customers. Facts brought to light in recent investigations into the handling of the customer class action and related litigation by outside counsel and some direct staff members managed by the Office of the Los Angeles City Attorney, leave us no choice but to engage independent legal counsel to eliminate conflicts of interest that compromise the interest of the department and the people we serve.”
The LADWP Board of Commissioners is also expected to call for a series of ethics-based corrective actions that would redefine and govern the relationship between the department and the legal representation provided to the department by way of the City Charter and any city-authorized outside counsel engaged by the department during Tuesday’s Board meeting.
The corrective actions would establish a framework for applying a Board of Commissioners ‘conflicts stress test’ to the engagement of legal counsel to determine any and all circumstances where legal conflicts of interest, actual or perceived may exist, and mandate disclosure through a formal process attested to by parties seeking to represent the LADWP in legal matters. Board President McClain-Hill said, “Our goal is transparency, and to ensure that conflicts of interest are avoided through a thorough disclosure process.”
Among the additional ethics reform measures to be introduced in a board motion is a strict prohibition against any counsel representing the LADWP from offering or providing contracted professional services to the LADWP while under contract to represent the department on legal matters and against any future professional services being contracted for any attorney that relates to the subject of their legal representation.
“We owe it to our customers and the hard-working women and men of this Department to take action to prevent the types of legal conflicts of interest and ethical lapses that led to the complete fiasco in handling legal cases that stemmed from our customer billing system and the class action lawsuits that followed,” said Board Vice President Susana Reyes, who is also a retired LADWP employee. “As someone who spent decades serving alongside our dedicated employees, it sickens me to see their professional reputations damaged by these entirely preventable conflicts, and I am committed to instituting ethics reforms that will prevent them from ever happening again.”
The Board Motion also directs LADWP’s Chief Financial Officer and its Chief Accounting Employee, to prepare and present to the Board a full report detailing any and all ratepayer funds spent between September 1, 2013 to present date for legal representation in connection with a myriad of legal cases, reviews and mediations that have been the subject of an ongoing federal probe and that have resulted in federal charges being filed against a former DWP general manager. It also calls for ongoing accounting of all outside counsel expenditures and public disclosure through semi-annual reports to the Board. The financial impact report will include the total expenditures and hours, including the names of all firms representing either the LADWP and City of Los Angeles, and those ratepayer funds expended by the City Attorney for any outside special counsel retained by the City Attorney’s Office to provide outside counsel or investigatory services on behalf of the Office of City Attorney.
Further, the Board is expected to direct LADWP’s general manager to hire an Inspector General within 90 days, a previously approved position which was publicly posted on December 10, 2021, and to provide a report to the Board regarding the funds and staffing initially proposed to be allocated to the LADWP Office of Inspector General.
The Board is also expected to direct the establishment of a formal process for the internal reporting of employee concerns directly to the Board office through its Chief Accounting Employee.
Finally, the Board Motion will reform the role of the LADWP Chief Procurement Officer (CPO), to ensure CPO sign-off on adherence to all procurement practices and standards and request that the Office of Public Accountability provide a report to the Board of Water and Power Commissioners consisting of recommendations for additional remedial action within 45 days.
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