A Los Angeles County judge signaled Tuesday that Department of Water and Power union chief Brian D'Arcy will have to turn over records showing how two nonprofit trusts he co-directs used $40 million in ratepayer money.
D'Arcy has been locked in a political and legal struggle over control of the financial information since September, following a Times report that managers at the utility had only scant information on how the money was spent.
In January, City Controller Ron Galperin issued a subpoena to D'Arcy and the nonprofits demanding that they turn over internal ledgers and bank records covering the last five years. Galperin also asked D'Arcy to submit to questioning by city auditors.
D'Arcy sought to quash the subpoena in Superior Court, arguing that the nonprofits were not public agencies, were not subject to state open government laws and were not obligated to comply with Galperin's request.
But on Tuesday Judge James Chalfant sided with Galperin, saying, "The overarching principle here is does the city get to find out what happened to city money intended for a public purpose? It does."
The ruling, which becomes final April 22, would give D'Arcy 10 days to comply with the subpoena or persuade an appeals court to intervene. "Today is an important victory for transparency and an important step in holding accountable those who think they are above the law," Galperin told reporters after the ruling.
D'Arcy could not be reached for comment.
The nonprofits — the Joint Training Institute and the Joint Safety Institute — were created more than a decade ago after a grueling round of job cuts at the city-owned utility. The institutes were charged with improving relations between labor and management, and have received up to $4 million per year. They are co-directed by D'Arcy's union, the International Brotherhood of Electrical Workers Local 18, and top managers at the DWP. Both groups have equal representation on the nonprofits' boards.
After The Times report in September, Mayor Eric Garcetti, City Atty. Mike Feuer and Galperin unsuccessfully sought the nonprofits' financial records.
D'Arcy's attorney, Bill Heine, argued that the city could have gotten any financial information it wanted about the nonprofits from the DWP managers who sit on the boards because they must agree to all expenditures.
But former DWP General Manager Ron Nichols, who resigned in January, said D'Arcy had threatened to sue him personally if he turned the nonprofits' records over to city officials.
In his decision, Chalfant noted that the DWP managers had provided "no supervision" and "little control" over the nonprofits' spending and therefore share the blame for the controversy.
"This failure is serious and has resulted in well-warranted public scrutiny as to how $40 million of public funds was spent," Chalfant wrote.