Head of DWP apologizes to Mayor Garcetti for criticizing audit of nonprofits

The head of the Los Angeles Department of Water and Power offered an unusual public apology to Mayor Eric Garcetti and other officials Tuesday, saying her comments assailing an audit of two controversial nonprofit groups linked to the city-owned utility were “not appropriate.”

The apology, delivered at a meeting of the commission that oversees the department, was the latest twist in an intensifying debate over how the groups have spent tens of millions of dollars in ratepayer money.

An audit released by City Controller Ron Galperin last week found that officials at the nonprofits used work-issued credit cards for steak dinners, gasoline for their personal vehicles and other expenses. Both groups have close ties to the International Brotherhood of Electrical Workers, Local 18, which represents most city utility workers.

DWP General Manager Marcie Edwards co-signed a written response to Galperin’s report with union head Brian D’Arcy asserting that city auditors seemed “intent on casting aspersions on the management of the trusts and conjuring up baseless accusations about nonexistent malfeasance.”

Edwards’ decision to side with D’Arcy was an awkward public divergence from the agenda of the mayor who appointed her. Garcetti called for curbing the union’s power during his 2013 mayoral campaign and has expressed support for the controller’s audit.

On Tuesday, Edwards abruptly reversed course, saying that the audit’s recommendations for overhauling the nonprofits “form the basis of a good plan to move forward.”

“I regret allowing my frustrations with the audit process overall to lead me to agree to some characterizations which were not appropriate,” she told commissioners. “For that, I sincerely apologize to the mayor, the controller and this board.”

Edwards’ retreat set the stage for commissioners to condemn the questionable spending identified by Galperin.

“This is a public relations nightmare for us,” said Commissioner Jill Banks Barad, a Garcetti appointee. Barad said the activity disclosed in Galperin’s audit showed “an utter contempt for ratepayers.”

The commission instructed Edwards to report monthly on the progress being made on the controller’s recommendations. Commissioners also agreed to seek advice from City Atty. Mike Feuer on options for reining in the nonprofits’ spending — a potentially complicated task because the groups’ nearly $4 million a year in funding is secured in the city’s contract with the utility workers’ union.

D’Arcy did not respond to requests for comment.

At issue are the Joint Safety Institute and Joint Training Institute, which were founded by the city and union in the early 2000s to improve workplace safety, among other things. The groups came under scrutiny last year after The Times reported that DWP officials had little information on what the institutes had done with $40 million in ratepayers’ money.

Union officials went to court to prevent city auditors from gaining access to the groups’ financial records and Galperin is still waging a legal battle for full access to the nonprofits’ books. In the meantime, a compromise allowed the controller’s office to transcribe, but not copy, five years’ worth of records.

The limited audit based on that review was released last week and showed that the nonprofits had issued millions of dollars in contracts without a proper bidding process, funded travel for employees to Las Vegas and Hawaii, and issued 19 credit cards for use by a handful of officials.

Among the $667,000 in expenses charged to credit cards was a $1,354 meal at a steakhouse and $30,000 for one administrator’s gasoline during the period reviewed by auditors.

“The abuses showcased in the audit are an embarrassment to this department,” Commissioner Christina Noonan said. “I can’t believe that 19 credit cards were issued,” she added. “I don’t think any of these individuals should have cards.… I don’t even want them buying bubble gum at a gas station.”

A separate audit released last week by City Administrative Officer Miguel Santana said that the groups sponsored various training programs over the years but were unable to offer “real information on the outcomes or effectiveness” of those programs.

Commissioners’ criticism of the nonprofits was much stronger than that expressed so far by the mayor.

Garcetti campaigned on a promise to bring tougher oversight to the DWP, and D’Arcy’s union spent millions on behalf of Garcetti’s 2013 mayoral opponent, former City Controller Wendy Greuel. After The Times reports on the nonprofits, the newly elected mayor demanded audits of the groups and backed Galperin’s efforts to obtain the financial records.

But Garcetti’s comments since the release of the audits have been measured.

Responding to questions at an unrelated news conference this week, he declined to say whether he agreed with Galperin that the spending identified in the audits was an abuse of public funds.

“There are clear things that need to be reformed,” Garcetti said. “There are clear things that should not have happened without record-keeping.”

Garcetti said he continues to support Edwards and praised her “strong reform agenda,” while acknowledging that he disagreed with her criticisms of the audit. Edwards didn’t consult him before signing the letter with D’Arcy, he said.

“I can agree to disagree with her,” Garcetti said. “I deal with that and let my general managers know, ‘I’m the boss. That doesn’t reflect my thinking and that shouldn’t reflect yours.’ “

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Times staff writer David Zahniser contributed to this report.