The politically powerful head of the Los Angeles Department of Water and Power's largest union has refused to cooperate with an audit of two nonprofit trusts established to improve relations between management and labor at the city-owned utility.
City officials began trying to account for more than $40 million in ratepayer money poured into the nonprofits' accounts over the last decade after The Times reported in September that the DWP had only scant information on how the money has been spent.
The nonprofits, the Joint Training Institute and the Joint Safety Institute, are co-run by DWP General Manager Ron Nichols and the International Brotherhood of Electrical Workers Local 18's business manager, Brian D'Arcy. At a meeting last week, D'Arcy refused to turn over the institutes' financial records for an audit planned by the city controller, Nichols said.
On Tuesday, Nichols, who says he supports the audit, told the DWP's board of commissioners that he was hiring an outside law firm to help resolve the deadlock and make D'Arcy turn over the records.
"I'm unaware of any specific inappropriate use of the trust fund money," Nichols told the board, "but I don't agree with the stiff-arm approach that has been taken by the union members of the trusts."
Michael Fleming, one of five commissioners appointed by Mayor Eric Garcetti, called D'Arcy a "bully who can't face reality" and noted that DWP ratepayers would ultimately get stuck with the additional legal fees. "We're having to do this because one person has decided he simply can't be honest and transparent," Fleming said of D'Arcy.
Commission President Mel Levine said, "It's inconceivable to me that any member of the trust would not cooperate…. It's simple common sense that public funds should be transparent in terms of their expenditure."
D'Arcy did not respond to a request for comment Tuesday afternoon.
Last month the commissioners asked City Controller Ron Galperin to audit the nonprofits after union leaders promised but failed to produce their own audit of the groups' spending.
On Tuesday Galperin called on the union to stop "playing games" and warned that he would send subpoenas to anyone who has information about the group's finances — including banks — if the union didn't turn over records by Jan. 8.
"It's outrageous, it's inexcusable," Galperin said. "What they're doing is simply costing the city money and time when we know what the result is going to be, we'll get the information."
City Atty. Mike Feuer said, "The city charter entitles the controller the right to audit the JTI and JSI, which are funded by public dollars. I will do everything in my power to assure the controller obtains the information he needs to conduct a thorough audit that promotes the transparency our ratepayers deserve."
After a string of contentious job cuts at the utility in the late 1990s, the two nonprofits were created with a mandate to promote "communication, mutual trust and respect" between DWP managers and the union. They have received as much as $4 million per year in ratepayer money since.
When The Times made a formal request under the California Public Records Act for the financial records in August, the union refused to provide any documents, contending that the nonprofits are not public agencies, and the utility executives claimed to possess only limited information about how the money had been spent. Department managers and labor leaders refused to describe the nonprofits' day-to-day activities.
Speaking before the City Council's energy and environment committee last month, Nichols likened the groups to consultants who advise on safety and training, but he could not come up with a list of their accomplishments when asked to do so. Nichols has been co-managing the institutes for three years.
Nichols noted that $4 million per year was not a huge amount of money at a utility that spent about $4 billion per year, and said the department's annual in-house budget for training and safety was about $115 million, dwarfing anything the nonprofits might do.
Limited records provided by the DWP show the nonprofits have spent about $1 million a year to pay the salaries of a few of the trusts' top executives: The Joint Training Institute's administrator was paid $212,236 in 2012, the records show. Jon Pokorski, another top administrator and the union president, was paid $171,361 in 2012.
Federal tax forms filed by the nonprofits offer only broad summaries of the organizations' outlays, including more than $360,000 spent on travel from 2009 to 2011 and nearly $2.4 million spent on "other."