Attorney Mori Draws Fire for Business Dealings : Harbor Commissioner Roils the Waters

The hotly debated appointment last fall of mayoral aide Ezunial Burts as Los Angeles Harbor’s general manager focused attention on the commission that picked him, prompting a Times examination of its two most senior members, Frederic A. Heim and Jun Mori. The Times found that Mori and Heim, whose activities were chronicled in Sunday’s editions, have churned up more controversy than any other commisioners in the city. In a confidential memo to his boss in November, 1982, the chief lawyer for the Port of Los Angeles got right to the point about harbor Commissioner Jun Mori:

“Commissioner Mori,” wrote Senior Assistant City Atty. Winston Tyler, “has continuously displayed an attitude that the (city’s) conflict-of-interest provisions were a nuisance and the position taken by our office was an irritant.”

Tyler told The Times he was frustrated then--and has been since--by Mori’s insensitivity to appearances of conflicts, as reflected in the commissioner’s participation in matters that could financially affect him.

Mori is a private attorney whose firm represents several clients doing business with the Port of Los Angeles, governed by the Harbor Commission.

Mori has denied any impropriety and retains the backing of Mayor Tom Bradley, who appointed him to the five-member panel in 1977. Bradley calls Mori “one of the most ethical and honest people that I’ve ever met.”

If the commissioner has one fault, said Jeff Matsui, Bradley’s harbor liaison, it is that “he sometimes seems very naive about how he may be perceived.”

Here, based on confidential city documents and interviews with harbor and City Hall officials, is a look at why Mori has come under fire by authorities throughout Los Angeles government:

- In late 1982 and early 1983, Mori did not disclose that his law firm had been trying to merge with a law firm he backed for a lucrative city contract. Mori, in revealing his merger talks just eight days before the contract was to be voted on, insisted there was no conflict. The city attorney’s office disagreed. A new firm was quickly picked.

- Throughout 1983, Mori was investigated by the district attorney’s office for allegedly pressuring the harbor’s general manager into giving special treatment to one of his law firm’s clients, Distribution & Auto Service, an importing arm of Nissan Motor Co. The district attorney’s office concluded that Mori had interceded on his client’s behalf but that there was insufficient evidence to show criminal intent.

- Over the years, Mori’s potential conflicts of interest repeatedly have barred the commission from voting on harbor matters. These matters have been sent for action to a special City Council committee, the Board of Referred Powers, whose members are not maritime experts. In frustration, some have begun to call for the commissioner’s ouster.

Although Mori refused to be interviewed by The Times, he has presented his side in various documents.

In a recent letter to Councilman Ernani Bernardi, for example, Mori wrote, “I understand your concern with respect to potential conflicts of interest in my service to the city but you can rest assured that the utmost attention has been given to avoid even the appearance of any conflict.”

That letter was in response to one Bernardi sent Bradley in April, urging Mori’s removal from the commission, which has broad power over port contracts, finances and operations.

Bernardi is president of the Board of Referred Powers. The board, composed of five council members, votes on behalf of city commissions whose members have potential conflicts of interest.

Few on Bernardi’s committee have expertise in complicated harbor matters. Yet they have been called upon to decide many harbor issues because of Mori’s legal work for companies that do business with the port, such as Nissan, Sumitomo Bank, Nissho-Iwai American Corp., Murata Pearls and Union Carbide Corp.

The commission has been unable to vote on matters both insignificant and immensely important to the port, including construction of a $60-million shipping terminal, automobile berthing sites and tariff rates, the purchase of multimillion-dollar container cranes, major steamship line agreements and, recently, a complicated financing plan for $147 million in harbor construction bonds.

Substituting Board

During the last eight months alone, the Board of Referred Powers has sat in for the Harbor Commission 11 times--more than double the number for any other city commission. Most of the cases stemmed from Mori’s firm’s representation of Nissan’s Distribution & Auto Service.

Bernardi, echoing his committee’s concerns, maintained in his letter to Bradley that “it is not in the city’s best interest for the board (of referred powers) to assume the powers of a commission on a frequent basis.”

Bernardi emphasized in an interview that he does not question Mori’s integrity. He said his problem is with a situation that keeps the commission from doing its job.

“I think it would be in the best interest of everybody,” Bernardi said, “if Jun Mori was not sitting on the Harbor Commission.”

Even Mori’s fellow commissioners have begun to ask whether the public is being best served.

Members Not Pleased

“We have a situation in which we have relied to a great extent on the Board of Referred Powers,” Commissioner Dominick Rubalcava said during a commission meeting last December. “And we’re not talking about an entity that sits there waiting for business from us. It’s an entity comprised of individuals who have a busy schedule, who have commitments and who have made it clear in the past they’re not pleased with getting the volume of matters referred to them.

“I doubt in all candor,” Rubalcava said, complaining about having the council committee approve the $147-million bond-financing arrangement, “. . . that they will have the time and energies to go through this to the degree necessary.”

Bradley, however, remains loyally in his commissioner’s corner.

A Bradley contributor and fund-raiser, Mori was appointed to fill a seat on the commission traditionally held by an Asian.

Praise for Japanese

In an interview, Bradley praised the Japanese-American Mori as being vital to harbor efforts to keep and attract business from the trade-rich nations of the Pacific Rim, which account for 60% of the cargo moved through the Port of Los Angeles.

Harbor trade missions to the Far East rarely embark without Mori aboard, sometimes with Bradley at his side.

“He is held in high esteem” in Japan, Bradley said of Mori, who speaks fluent Japanese. This has created a “climate where you can get positive response from some of the biggest clients that the port has,” the mayor said.

Educated in Japan and the United States, the 56-year-old Mori served on former President Jimmy Carter’s Export Council and once sat on the advisory board of California’s Office of International Trade.

In his legal practice, Mori caters primarily to California subsidiaries of Japanese firms.

Although Mori has been praised in his role as the port’s Far East emissary, one top mayoral aide observed, “We certainly have gotten rid of commissioners for doing a lot less than he has.”

Disturbed by Involvement

The ranking Bradley aide, who requested anonymity, said he was particularly disturbed by Mori’s involvement in the commission’s search for a law firm to handle the sale of $34 million in harbor bonds and by the circumstances surrounding the district attorney’s probe.

In 1982, Mori and Commissioner Frederic A. Heim sat on a two-man committee to recommend to the full commission a legal firm for the bond sale.

During a six-month search that ended in spring, 1983, six firms were considered. Ultimately, Mori and Heim decided to recommend Philadelphia-based Pepper, Hamilton & Scheetz, according to confidential city attorney memoranda and their author, Tyler.

For Pepper, Hamilton & Scheetz, the contract would have meant an estimated $75,000 in immediate fees. But more importantly, it would have given the lawyers a solid foothold in the city’s lucrative bond market, long dominated by the politically connected Los Angeles firm of O’Melveny & Myers.

Refused to Sign Report

At the last moment, when it came time for Mori to sign a report recommending the well-regarded Eastern firm, he refused, according to city attorney memos obtained by The Times.

In a conversation with the commission’s top staff member, who had prepared the report, Mori disclosed for the first time that his own law firm, Mori & Ota, had been engaged in merger negotiations with Pepper, Hamilton & Scheetz. The staffer alerted Tyler, saying that Mori was “reluctant to . . . discuss the matter at any length,” one of the memos stated.

The commissioner, whose 11th-hour revelation threw the entire selection process into chaos, then frustrated city attorney efforts to neatly resolve the problem by turning it over to the Board of Referred Powers, several of the memos suggested.

The Charter requires a commissioner to notify the city attorney’s office when faced with decisions in which he has an economic interest or there is an appearance of a possible conflict. Based on information provided by the commissioner, the city attorney then issues an opinion as to whether the matter should be transferred to the council’s Board of Referred Powers.

This procedure is a cornerstone of city efforts to guard against appearances of favoritism and divided loyalties, which can, the reasoning goes, undermine public confidence in government integrity.

Asked for an Opinion

Seventeen days after his initial disclosure, Mori did ask in writing for a city attorney opinion--at Tyler’s urging. In his request, however, Mori did not identify the law firm with which he had been engaged in merger talks. He provided no information about his relationship with Pepper, Hamilton & Scheetz.

Mori wrote only that he had done no wrong, that he had not participated in commission interviews with the unnamed law firm’s representatives and that “exaggerated reactions” are “totally uncalled for.”

Tyler was stymied. Under a City Charter provision, he could base an opinion only on information provided by Mori.

Tyler asked the commissioner for more details. But his request went unanswered, according to the city attorney memos. This, in effect, kept the issue before the commission.

Commissioner Heim and the city attorney’s office then agreed on a way to salvage the bond counsel search and avoid questions about Mori’s possible conflict--by making no mention of the commissioner’s involvement in public records.

Report Gets Rewritten

Two months after Mori refused to sign the report praising Pepper, Hamilton & Scheetz as best qualified for the job, the report was rewritten.

This time Orrick, Herrington & Sutcliffe of San Francisco topped the list of contenders that still included Pepper, Hamilton & Scheetz.

And the revised report also omitted a troublesome detail: Mori’s earlier participation.

Heim signed the document stating that he had acted as “a committee of one” in finding a law firm. The earlier report--which never found its way into the harbor’s public files but was provided to The Times--noted that two commissioners had conducted the search.

Tyler acknowledged that this “quick solution” was not exactly “up front.” But it did remove the risk, Tyler said, of having the Pepper, Hamilton & Scheetz contract invalidated under state conflict-of-interest laws by simply giving it to someone else.

More Facts Wanted

“I think it could have been handled in a better way than that--more open--yes,” Tyler said. “I think it would have been better had the facts been set forth (by Mori) and then have the matter handled by the Board of Referred Powers. . . . It would have put beyond question the selection of whatever firm was selected.”

Asked whether the city attorney’s office, through its approval, had helped perpetuate a kind of charade, Tyler said: “I’d hope it wouldn’t be perceived that way, but I can see it could be.”

For his part, Heim said, “There was no intent at deviousness.”

Tyler’s boss, Senior Counsel Claude Hilker, who approved the committee-of-one approach, said he had no problem with it because Heim actually did review candidate qualifications by himself before making a recommendation to the full commission.

Ironically, the controversy made little difference in the eventual selection of a bond counsel. The commission--with Mori absent--voted in favor of Heim’s recommendation, only to be rebuffed by a City Council committee overseeing large harbor contracts.

Better, Cheaper Job

The committee, unaware of the preceding events, argued that O’Melveny & Myers could do a better and cheaper job because of its previous city work. The commission complied with the council’s wishes.

Also, Mori’s contemplated merger with Pepper, Hamilton & Scheetz collapsed several months later, after roughly a year of negotiations. Attorneys in both firms said in interviews, however, that the failed merger was unrelated to the bond counsel contract.

Last year, Mori & Ota was taken over by the New York-based Kelley, Drye & Warren.

While the bond sale ultimately went off without a hitch, Mori’s failure to disclose his merger efforts sooner and provide the city attorney’s office with detailed information spawned criticisms and suspicions that have yet to subside.

Tyler and another city attorney for the harbor said that Mori had been reluctant in other instances to request city attorney opinions without being prodded.

Not Hiding Anything

“If you’re hesitant to ask (for a city attorney opinion) then everybody wonders, ‘If you’ve got nothing to hide, then you should be willing to say things openly,’ ” Tyler said. “If you’re backing away from it, then I think the natural reaction is to be suspect.”

Jeff Matsui, the mayor’s harbor liaison and a staunch Mori defender, conceded in an interview that, “If I had known sooner, I would have told him not to get involved (in the bond counsel search).”

As the city attorney’s office struggled with the bond counsel problem, Mori was coming under scrutiny on another, more serious, front. He had become the subject of an investigation by the district attorney’s office.

The probe centered on allegations that Mori, as commission president in the early 1980s, had put pressure on the port’s then-executive director, Dr. E. L. (Roy) Perry, to obtain prime harbor property and a favorable lease for his client, Nissan’s Distribution & Auto Service, a long-time harbor tenant who was being asked to move.

State Law Involved

Under state law, a public official cannot make, participate in making or attempt to use his position in any way to influence a governmental action in which he has a financial interest.

The conflict-of-interest allegation did not come from an anonymous source or disaffected low-level harbor worker. It came from Tyler, based on a series of conversations he had with Perry, the port’s top management executive, who retired from his harbor post last October.

Tyler detailed his conversations in a memorandum to his city attorney superiors. The memo was forwarded to county prosecutors for investigation by then-City Atty. Ira Reiner, who is now district attorney.

The memo, obtained by The Times, provides this account:

Tyler said a port official alerted him in late 1982 that DAS’ proposed lease renewal, scheduled for commission approval, contained irregularities. The auto importer was being given a cut-rate deal on rent, in Tyler’s estimation, and four years to pay back money it owed the harbor--totaling $417,000, including interest--at half the interest rate normally charged. “A glaring deficiency,” Tyler wrote.

Tenant of Harbor

Like most harbor businesses, DAS rents land from the harbor, subject to commission approval.

Tyler said he grew concerned. He remembered Mori’s response a short time before when he had urged the commissioner to request an opinion so the Board of Referred Powers could be sent DAS’ lease.

“ ‘I don’t have any conflict,’ ” Tyler quoted Mori as saying, “ ‘but if you feel you have to write an opinion, go ahead--but keep it quiet.’ ”

Tyler decided to investigate further. He confronted Executive Director Perry, who had negotiated the proposed agreement. Representing DAS in the negotiations was Mori’s junior partner, Henry Ota.

“Roy Perry admitted to me that the lease was not in the city’s best interest because there was less than adequate compensation, and he attributed this to pressure applied to him by Commissioner Mori,” Tyler wrote.

Perry said that Mori had pressured him personally and through two other commissioners to “negotiate a favorable lease for DAS,” according to Tyler’s memo.

Displeased With Plans

Perry also said that Mori expressed displeasure with harbor plans to relocate DAS, the memo said. DAS was on property that the harbor needed to expand the terminal of American President Lines--a project that would bring the port much more money.

“Roy (Perry) stated that on his most recent trip to Japan with Commissioner Mori, after the two visited the Nissan Motor Co. offices in Tokyo, Commissioner Mori directed Roy to accommodate Nissan’s wishes with respect to remaining on a portion of Harbor Department property which was to be a part of the American President Lines terminal expansion,” Tyler wrote.

“When Roy protested that this would conflict with APL, Commissioner Mori told him that he would stop the APL terminal if he (Perry) did not meet Nissan’s request.”

Tyler concluded his six-page memorandum by suggesting that the mayor schedule a meeting with the commissioner.

Meeting With Bradley

A few days later, Bradley summoned to his office Mori, Perry, Tyler, Reiner, another city attorney official and two top mayoral aides.

Perry claimed that his remarks had been exaggerated by Tyler, who, for his part, stood behind the accuracy of his account.

The tense meeting only served to convince some participants that a deeper inquiry was needed. Reiner asked the district attorney’s office to investigate.

Although no criminal charges were filed, the probe did not entirely clear the air.

“Our investigation has disclosed that Mr. Mori did speak to Dr. Perry, directly and through other commissioners, to attempt to expedite the negotiation process,” the district attorney’s office concluded in its December, 1983, final report. “However, it is not clear that he used his official position to attempt to influence the terms and conditions of the lease.”

Not Completely Vindicated

In an interview with The Times, Deputy Dist. Atty. Deborah Kranze, who headed the probe, explained that her finding “in no way means that the facts we uncovered or our decision not to prosecute vindicated Mr. Mori.”

Kranze said Mori did exert pressure on DAS’ behalf but that there was insufficient evidence to prove beyond a reasonable doubt that he was trying to “accrue a benefit for his client that he would not have tried to accomplish for any tenant in the harbor.”

Moreover, Kranze said, successful prosecution would have been difficult, given Perry’s contention that his remarks had been “blown out of proportion” by the harbor’s city attorney.

Personally speaking, she added, “I was not convinced that Perry’s initial statements (in Tyler’s memo) were not accurate” but “as a practical matter I would be left with what he would say in a court of law.”

The Times obtained a copy of Perry’s taped interview with the district attorney’s office and it confirms portions of Tyler’s memo but provides a different context.

Only Expressing Opinions

Perry said he believed Mori was expressing “opinions and not directives” as a member of the Harbor Commission frustrated by the lengthy lease negotiations, not as an attorney doing his client’s bidding.

In his capacity as a commissioner, Perry said, Mori did threaten to block the American President Lines terminal expansion unless DAS got equal or better property than it was being forced to leave.

“This, in effect, had the effect of stopping the APL project because there was no way that we were going to be able to provide equal or better facilities in L.A. harbor,” Perry told the district attorney’s office.

“I personally felt the APL project was a far more important project than keeping Nissan or DAS happy,” said Perry, estimating that APL would bring the city at least four times as much money as the auto importer.

“All tenants are equal,” Perry quoted Mori as saying, no matter how much they funnel to harbor coffers.

In the end, DAS got a choice chunk of acreage elsewhere in the harbor, and the American President Lines development got under way, though behind schedule. Completed last year, the APL terminal is the West Coast’s largest.

Lease Was Canceled

Also, DAS’ proposed lease was scrapped shortly after the the district attorney’s probe began and an analyst in the city administrative office said he would recommend its rejection because it would not make enough money for the harbor. The new lease--approved by the Board of Referred Powers--contained terms more consistent with harbor standards. It required DAS, for example, to pay 10% interest, rather than 5%, on money owed the harbor. The company also was given 16 months to pay, instead of four years.

Those changes translated into an additional $347,480 for the port.

Bradley, in an interview, praised Mori for his concern about a harbor tenant experiencing problems with the port’s management.

“I would hope that any commissioner would try to expedite consummation of an agreement. . . . I would expect any and every commissioner to have that much interest in his assignment,” the mayor said.

Bradley said he was unaware, however, of charges that Mori threatened to block the APL terminal. “Therefore, I won’t comment on whether that would be proper.”

Concerned About Influence

As for Tyler, he remains concerned to this day that Mori exerted “influence that should not have occurred.”

“I think the proscription of the (conflict-of-interest) statute is that you should not exercise any influence, no matter how well-intended,” Tyler said. “It’s, again, the appearance (of a conflict) to the public that is to be avoided.”

And last September the commissioner demonstrated why the city attorney’s office is still skeptical that Mori is appropriately sensitive to appearances, Tyler said.

During a commission meeting, Mori moved on the commission’s behalf to approve a matter involving DAS. Tyler quickly interceded, reminding the commission of Mori’s representation of the firm.

The matter, like others before, was sent to the Board of Referred Powers.