Fluor Stripped of Convention Center Work

Invoking Los Angeles’ broadened anti-apartheid policy for the first time, a city authority Thursday stripped a subsidiary of the giant Fluor Corp. of its tentative approval to manage the $310-million expansion of the Los Angeles Convention Center.

Acting to remove Fluor Constructors, a domestic subsidiary of the international Fluor Corp., the Convention and Exhibition Center Authority’s commission first unanimously approved an anti-apartheid resolution of its own and then rejected all 17 bids it had received in the spring on the expansion management contract.

The votes effectively disqualified Fluor from the $2.5-million contract that it had tentatively been awarded. The contract had never been formally ratified.

The commission’s action followed a unanimous recommendation by the City Council Wednesday urging that Fluor be stripped of its contract because of its dealings with racially segregated South Africa. Adoption of the commission’s own anti-apartheid resolution was required because the Convention Center authority is a quasi-independent agency. As such, it does not fall under the anti-apartheid policy approved by the council last month as a measure of applying economic sanctions against South Africa.

The commission’s anti-apartheid resolution, like the City Council’s ordinance, restricts contracts with firms whose subsidiaries or parent companies do business in South Africa.

Although it is a domestic company, Fluor Constructors fell under the resolution because its parent corporation handled about $40-million worth of South African business last year. That total represents approximately 1% of Fluor Corp.’s total revenues of $4.2 billion, according to Rick Maslin, the Irvine-based company’s spokesman.

During discussion before their vote, commission members did not mention the apartheid issue or South Africa directly, but their resolution said the policy of institutionalized discrimination there denies “basic human freedom and dignity to the black majority.”

Moral Character

The authority “reaffirms its right . . . to measure the moral character of its business relations,” the resolution said.

Commission members indicated concern about the impact of the anti-apartheid stance beyond its management contract.

“Are you saying we can’t hold a boat show here because a boat company sells its boats to South Africa? Are you saying we can’t have a jewelry convention because they might have (South African) diamonds?” asked Commissioner Hal Ross.

Assistant City Atty. Pete Echeverria said types of conventions would not be limited by the ordinance unless their promoters had South African connections.

“The policy applies to the ties that a promoter might have, not (to) any of the exhibitors,” he said.

Timing Questioned

Fluor officials did not attend the commission meeting, but before the council session Wednesday one spokesman argued that the company should win the contract because the city policy banning dealings with South Africa-related firms was not in effect when the company won tentative approval earlier this year.

The Thursday hearing marked the first time that the commission has taken an anti-apartheid stand, but the council and Mayor Tom Bradley have approved three such ordinances during the last year and urged the city’s independent agencies to follow suit.

Bradley also has made the apartheid debate an issue in his campaign against Gov. George Deukmejian for the state’s top elected position. He has repeatedly criticized Deukmejian as a “George-come-lately” who became interested in apartheid because of the campaign.

One year ago, a plan pushed through the council by Bradley applied restrictions to city involvement with banks and finance agencies doing business in South Africa. Later, managers of the city employee pension funds were urged to withdraw investments in South African-related businesses.

Series of Actions

The council’s latest action came July 2, when it passed the law limiting its purchases from companies doing business in South Africa. That action set up the Fluor dispute. Overall, city officials said, more than $100 million in contracts are covered by the third law.

The bulk of the city’s contracts are exempt from the anti-apartheid policy because the City Charter requires that they be awarded by competitive bidding, wherein officials are required to accept the lowest responsible bid. Also exempt are already approved contracts and so-called “sole-source” contracts, where only one firm is qualified to provide goods or services.

The commission’s resolution sets up the same exemptions, Assistant City Atty. Echeverria said.

Dick Walsh, general manager of the Convention Center, said the second tentative contractor selection could be made within 60 days.