A leaked DWP report offers a critical assessment of the utility’s culture

Good morning, and welcome to L.A. on the Record — our City Hall newsletter. It’s Dakota Smith at the helm, with help from David Zahniser.

The Los Angeles Department of Water and Power is going through big changes at the top.

A new general manager was tapped. The board of commissioners elected a new president, former state lawmaker Richard Katz. And a search is underway for a new ratepayer advocate to keep tabs on the spending at the DWP.

But behind the scenes, the utility has also been facing withering scrutiny. A confidential report recently outlined long-standing problems with its culture and management structure.

The DWP board sought the report in the wake of a corruption scandal involving top executives at the utility, who were accused of rigging contracts and taking bribes, costing the agency tens of millions of dollars. Three people who worked for the DWP, including a former general manager, are now serving prison sentences.

The report, prepared by the law firm Paul Hastings, doesn’t offer earth-shattering revelations about the corruption scandal. But it does provide a bracing assessment of the department’s upper management, describing a workplace culture that encouraged employees to keep their “heads down” and “curry favor” with management in order to advance professionally and “maximize” their pensions.

The report, completed last year, looked at “systematic failures and gaps” that allowed wrongdoing to be carried out at the utility. The document was never publicly released, but has been reviewed by The Times.

Investigators with Paul Hastings interviewed about 40 people, including current and former DWP employees and commission members, according to the report.

“Everyone we spoke with agreed there is a significant accountability problem at the department,” the law firm wrote in its 95-page report, using italics for emphasis.

The report also depicted the DWP as a cliquey environment where employees received plum positions and promotions based on their relationships with top leaders, rather than their job performance.

The assessment concluded that the role of the DWP general manager is akin to a celebrity where there are “limited checks and balances” and “lots of feigned obsequiousness.” Also, the DWP lacks an internal system for reporting fraud, waste and abuse, the law firm found.

The report did recognize that the DWP has “hardworking” and “smart” workers. And it offered several recommendations, including regular reviews of employees and managers and a stronger role for the ratepayer advocate.

That post is currently held by Fred Pickel, who is departing later this year.

Representatives for Mayor Karen Bass and the DWP declined to comment on the report, saying it is a “confidential” communication between Paul Hastings and the utility.

Paul Hastings has a $4.25-million contract with the utility that started in 2022.

Since the corruption scandal became public in 2019, some moves have already been made. The ratepayer advocate — which is housed in the Office of Public Accountability — now sits in on closed-door board meetings, after previously being shut out.

Pickel, asked about his reaction to the report, told The Times that the Office of Public Accountability “can only be effective if listened to. It is easy for what we say to be ignored.”

Some of the issues outlined in the report aren’t new. A city report released in 2015 criticized the multiple layers of bureaucracy and political interference at the DWP, arguing that changes were needed for stronger oversight.

Jack Humphreville, who volunteers with the Neighborhood Council Budget Advocates, said the DWP faces competing pressures from City Hall, the union representing DWP workers, and environmentalists.

Humphreville said that he sees “an element of fear” among staff at the utility, who don’t want to lose their jobs or perks by bucking the system. The feeling at the DWP is “if you don’t play by the rules, [you’re] going to get screwed,” he said.

State of play

—BASS BREAK-IN: An intruder forced his way into Getty House, the Windsor Square residence of Mayor Karen Bass, over the weekend, smashing a glass door, cutting himself and leaving a trail of blood inside, according to prosecutors. Details from the D.A.’s office were chilling: Ephraim Hunter, 29, allegedly attempted to get into the home’s upstairs bedrooms, leaving blood on doorknobs. Bass and her family were inside the house at the time.

Hunter pleaded not guilty to burglary and vandalism charges. Meanwhile, LAPD’s interim chief disclosed that the department had no officers at Getty House at the time of the break-in, because of a “short gap” in time between security shifts.

— A ‘VERY DISTURBING’ EVENT: Bass has disclosed few details about the break-in, telling The Times she’s “trying to be respectful” of the ongoing investigation. “It was a very disturbing event, and I’m glad that my daughter, son-in-law and brand-new grandson are OK,” she said.

— BUDGETING WITH BASS: Back at City Hall, the mayor issued her $12.8-billion budget for the 2024-25 fiscal year, scaling back spending in a number of areas. The proposed budget provides enough money for 8,908 police officers, a far cry from her goal of 9,500 from last year. The plan also reduces homelessness spending, in large part because of the coming end of Proposition HHH, the 10-year housing bond measure.

— SKID ROW SETBACK: The nonprofit AIDS Healthcare Foundation announced Thursday that it had abandoned its plan for purchasing six distressed properties from the portfolio of Skid Row Housing Trust, which collapsed financially last year. An AHF spokesperson said the properties needed millions of dollars in repairs and were on track to continue to experience large operating losses.

— MORE FOR MENTAL HEALTH: L.A. County leaders unveiled a $45.4-billion budget that would ramp up the hiring of mental health workers, adding more than 450 positions at the county’s Department of Mental Health. Those new hires would be assigned systemwide and include positions for homeless outreach, county clinics and the new CARE Court system.

— LEGAL SHOCK WAVES: Atty. Gen. Rob Bonta announced the filing of felony charges against a top advisor to Dist. Atty. George Gascón, accusing her of mishandling the confidential records of 11 sheriff’s deputies. Assistant Dist. Atty. Diana Teran, through her lawyer, denied wrongdoing. The charges come as Gascón is campaigning for reelection and are expected to have a far-reaching effect on cases handled by his office.

— SUBWAY STABBING: Distressed by the stabbing death of a subway passenger heading home from work, Metro’s 13-member board asked its staff to study an array of measures for beefing up security on its bus and rail system. “I hate to say it. I will not ride our transit system by myself. I am afraid. And I sit on Metro,” said County Supervisor Kathryn Barger.

—ONE AND DONE: Bass selected Carmen Chang as the next general manager for the Department of Neighborhood Empowerment, known as DONE. Chang works as a director at an anti-poverty nonprofit.

QUICK HITS

• Where is Inside Safe? The mayor’s signature program to combat homelessness did not launch any new operations this week. However, attorneys for the city were in court seeking the dismissal of a lawsuit targeting Bass’ declaration of an emergency on homelessness. The next hearing is set for May 30.

• On the docket for next week: The City Council’s budget committee begins a series of meetings next week on Bass’ proposed budget. The first of those sessions is scheduled for Tuesday at 1 p.m.