L.A. Unified school-building program was full of conflicts of interest, audit says

The $20-billion school construction program in the nation’s second-largest school system was rife with conflicts of interest, but most problems were eliminated after 2006, according to an independent audit released Wednesday.

The long-awaited review was conducted by the office of City Controller Wendy Greuel and was commissioned by the Los Angeles Unified School District after the March indictment of a senior facilities manager. Bassam Raslan had allegedly funneled business from the massive school-building effort to a company he co-owned.

The district has relied heavily on contractors to supervise projects, defending the practice as a way to attract high-quality workers while providing flexibility to increase or reduce their numbers as needed.

The audit, which examined records dating to 2002, found 225 instances in which consultant hiring panels included people from the same company as the applicant. Eighty hires were made without using the required panels at all. And auditors identified four people who participated in hiring panels and “stood to receive a direct financial benefit because they selected a [consultant] from a firm in which they had an investment,” Greuel wrote in her cover letter for the audit.

The school system, through its inspector general, intends to conduct a follow-up investigation, with particular attention to the four unnamed people, and report to the Board of Education within 30 days, said general counsel Dave Holmquist. It’s premature to speculate whether the findings might be forwarded to law enforcement, he added.

The public version of the audit did not identify individuals or companies, making the document less revealing than this year’s grand jury report and earlier inspector general audits.

“Because the LAUSD is our client, we can’t name the names independently,” said Deputy City Controller Ben Golombek.

Holmquist pledged to release names at the conclusion of the investigation. In April, he said L.A. Unified would examine the grand jury’s evidence on Raslan and his company, TBI & Associates, but the district’s follow-through apparently has been limited.

Officials Wednesday said, for example, that they had not yet calculated how much the district has paid Raslan or TBI either on an annual basis or since Raslan began work for the district in 2002.

The district has provided Raslan’s hourly rate, which was $202. His personal compensation would have been 80% to 90% of that figure, with the rest going to the prime contractor that brought in Raslan and his company, officials said.

TBI still provides 20 contractors whom the district identified as crucial to ongoing projects.

Through his attorney, Raslan has denied any wrongdoing, asserting that district officials were aware of all of his actions.

So far, the school system has been billed $72,000 for the controller’s audit, which was completed by Sacramento-based Sjoberg Evashenk Consulting.

howard.blume@latimes.com