Riordan Cleared in Ethics Inquiry by State Panel

Ending a 17-month investigation, the state ethics commission cleared Mayor Richard Riordan of conflict-of-interest allegations Wednesday, finding that the mayor never knew that one of his votes would mean big money to a company in which he was a major shareholder.

The decision concludes a prolonged review by the state’s Fair Political Practices Commission into his dealings with the Pasadena engineering firm of Tetra Tech Inc. Riordan was never interviewed in the probe.

The investigation centered on a 1993 budget vote Riordan cast while serving as a member of the Metropolitan Transportation Authority. At the time, he owned nearly $10 million in stock of an engineering firm that stood to gain hundreds of thousands dollars in fees with the budget’s passage.

Informed by the state Wednesday afternoon, Riordan said in an interview: “There wasn’t any real joy. This is what I expected, because I knew I didn’t do anything wrong.” The decision, he said, should put to rest “factual distortions and character attacks that others have engaged in for political purposes.”

MTA critics who had demanded that the state investigate Riordan said they were outraged by the FPPC’s failure to bring civil fines or penalties against the mayor.

State Sen. Tom Hayden (D-Santa Monica), who demanded a state investigation in 1994, suggested in an interview that Riordan’s exoneration may have been the result of a “quid pro quo” between the mayor and the FPPC.

“Their decision defies common sense,” said transit activist John Walsh, who, along with Hayden, asked for the investigation.

Hayden maintained that FPPC officials “compromised” their investigation by meeting with Riordan several months ago in Los Angeles about the deteriorating state of relations between the state ethics panel and the now-fired head of the city Ethics Commission.

The Riordan decision “smells like a back-room deal. . . . It’s very disturbing because the last thing you want is to feel that the state watchdog agency is partisan,” Hayden said.

But Riordan said neither he nor anyone from his office met with the FPPC, and he called Hayden’s allegations “amazing. . . . Tom is into politics. He’ll say anything that serves his purpose.”

Officials at the FPPC were not available late Wednesday to comment on Hayden’s charges. But Chairman Ravi Mehta said in an earlier interview that investigators never found evidence to prove that the mayor knew he had a legal conflict of interest.

The state’s Political Reform Act bans politicians from taking part in official decisions in which they “know or should have reason to know” they have a financial interest--such as an investment in a company. Politicians are required to abstain from decision-making because of any conflict, and violations can be punished through civil and/or criminal penalties.

At issue in the FPPC case was Riordan’s role in shepherding construction of the proposed Pasadena-to-downtown rail line--a lucrative project on which Tetra Tech has worked.

In 1993, Riordan championed approval of $97 million in MTA funding for the line, salvaging the project despite strong concerns about whether the agency could afford to build the billion-dollar venture.

That budget vote in turn triggered more than $445,000 in payments to Tetra Tech under a $1.05-million engineering contract that the firm had already secured from the MTA.

But Riordan--who was the second-biggest stockholder at the company, with shares then worth $9.75 million--said he had no idea that the Pasadena vote would benefit the company.

With investments totaling tens of millions, Riordan pledged during his 1993 campaign to separate himself from any potential business conflicts by placing his holdings in a blind trust.

But the mayor’s shares in Tetra Tech were never placed in that trust, according to the FPPC report released Wednesday, and it was not until months after the controversy broke following a story in The Times in June 1994 that the mayor divested himself of his shares in the firm. It had been his single largest holding.

Critics who brought complaints with the FPPC alleged that Riordan must have known of Tetra Tech’s work on the Pasadena line because he served on its board until just five months before the contract award and because his law firm had represented the company for years.

But Mehta said the proof wasn’t there.

“Yes, this was [the mayor’s] largest holding. And we can certainly speculate that ‘gee, maybe he probably knew or maybe he should’ve known.’ But our job here is to find evidence,” Mehta said. “According to my staff, it wasn’t even a close call.”

Mehta said FPPC investigators reviewed numerous Tetra Tech and MTA documents during their inquiry and interviewed five people whom he would not identify. Riordan was not among the five.

Mehta said the mayor had cooperated fully with the investigation through his attorney, Colleen McAndrews, and that investigators were well aware of his position both through his lawyer and through press accounts.

“We didn’t believe [talking to him] would provide any further information,” Mehta said. “It was clear he was going to say he didn’t know anything about the Tetra Tech contract with regard to the Pasadena line.”

Tetra Tech chief executive Li-San Hwang said Riordan had little to do with the company’s day-to-day decisions, and he welcomed the FPPC’s decision. “I never worried about it. . . . There was nothing we had done, and I never thought there was anything to it,” he said.