Although Tom Bradley resigned as a director of a South-Central Los Angeles bank when he was first elected mayor in 1973 to “avoid any possible conflicts” of interest, he has since established ties with two other Los Angeles financial institutions. The firms either do business with the city or have received favorable decisions from the City Council and mayor, records show.
Bradley has done nothing unlawful, but now questions about his relationship with the institutions--Far East National Bank and Valley Federal Savings & Loan Assn.--are being raised by his political opponents, notably Councilman Nate Holden, who is running against the mayor in the April 11 election. Holden also has raised questions about Bradley’s relationship with the brokerage firm of Drexel Burnham Lambert, through which Bradley purchased a limited partnership interest in a real estate investment in 1979. A spokesman for Bradley denied Thursday that the mayor has any financial interest in Drexel Burnham.
Served as Paid Director
Bradley has served as a paid director for Valley Federal since 1978; last year he received, although recently returned, $18,000 as a consultant for Far East bank.
The California Political Reform Act prohibits a public official from making a government decision in which he has a financial interest, said Sandra Michioku, a spokeswoman for the state Fair Political Practices Commission. That means that public officials who serve as directors in private firms must disqualify themselves from participating in any decisions that affect the corporation or its subsidiaries, Michioku said.
But Bradley is not covered by the law because the City Charter has no provision for the mayor to abstain from official actions, Michioku said. The mayor has three options when a measure is placed on his desk: Sign it, veto it or let it become law without action.
Last year the mayor was paid by Far East bank to serve as a foreign trade adviser. The mayor returned the consulting fee last week after learning that the city had deposited money in the Chinatown bank.
Bradley’s financial relationship with Far East may violate the city’s ethics code, contend Holden and City Council President John Ferraro. Both have asked the City Council to order the city attorney to investigate the matter. The council is expected to vote on their request next week.
Gets Director Fees
Bradley has served as a corporate director of Valley Federal since 1978. He became a director emeritus in 1987 when he turned 70 and continues to receive $24,000 annually in director fees. During his tenure with the bank board, Bradley has approved land-use ordinances that permitted Valley Federal’s development company to build two housing tracts in Los Angeles. Bradley said he was not aware of Valley Federal’s interest in the projects until it was called to his attention by a reporter.
None of the other mayors of the nation’s 12 largest cities is paid to give advice to a financial institution, a Times survey last year showed.
Defended His Service
Bradley declined to return phone calls to his office on Thursday. But in an interview last fall, he defended his service on the Valley Federal board and scoffed at the suggestion that his paid position presents even an appearance of a conflict-of-interest.
“I am a very unusual person and I don’t want you comparing me with somebody else in some other city in some other circumstance,” Bradley told a reporter. “I say this in all humility. I bring something to this equation that you won’t find the run-of-the-mill elected official being able to bring to the table.
“I wouldn’t do anything that would in any way compromise my standards of ethics and integrity.”
Those who have examined questions of ethics in government, however, said it is unusual for a prominent politician to mix public and private business.
‘It Only Gets Worse’
Bradley “has a fiduciary responsibility to (Valley Federal) to serve it and look after its best interests, which flies right in the face of his responsibilities as an elected official to serve the public,” Raymond Hanzlik said. Hanzlik is a former White House official in two Republican administrations and is now a managing partner in Heidrick & Struggles Inc., an executive search firm that specializes in corporate directors. “You have a built-in conflict of interest and it only gets worse from there.”
Thomas Whisler, a professor at the University of Chicago Graduate School of Business who has studied boards of directors extensively and written a book on the subject, said: “The fear is that (Bradley) is in somebody’s pocket and this company is going to get favorable treatment and so on and so on. It is amazing to me that Bradley is willing to take the risk of doing it.”
The mayor has participated in official actions that benefitted Valley Federal on these occasions:
In November, 1983, Bradley signed into law a provision that changed a 2.6-acre lot in Sepulveda from a parking zone to a residential zone and provided for more-intensive development. All Valley Financial Corp., a Valley Federal subsidiary, had an interest in the property, which a company spokesman said it sold after it received city approval to build 112 multifamily residential units.
Mark Fabiani, the mayor’s legal counsel, attributed Bradley’s approval of the zone change request to a typographical error. Fabiani produced a city document that listed the applicant as “All City Financial Corp.” instead of All Valley Financial Corp. Thus, Fabiani said, the mayor did not make the connection to Valley Federal when he signed the documents approving the bank’s request.
In October, 1984, Bradley approved a zone change necessary to allow Whitehawk Properties of Pasadena and All Valley Financial to jointly build a subdivision of 99 single-family homes in Sylmar. All Valley Financial appears on several city records in connection with the project, but was not named on the document Bradley signed. The thrift let its joint-venture partner apply for the necessary zoning changes.
All Valley Financial also received several zoning variances and land-use exemptions from Bradley appointees on the Planning Commission and other city officials.
More recently, issues have continued to crop up between Valley Federal and the city, although Bradley said he is not personally aware of them. Each year since 1983, the City Council has rejected a refund claim submitted by Valley Federal of $1.4 million in business taxes that were collected between 1985 and 1987. Valley Federal is suing the city to recover nearly $3 million in back taxes paid since 1982, city officials said.
‘Wears Two Hats’
Valley Federal officials insisted that they have not solicited the mayor’s help to expedite a development project, push a special tax break or for any other reason.
“Tom wears two hats,” said David W. Fleming, Valley Federal’s legal counsel. “When he sits here as director of this company, he wears a hat in which he votes as a member of the Board of Directors for what makes sense for Valley Federal. On the other hand, we don’t expect him to wear that hat down at City Hall.”
At one time Bradley expressed concerns about serving in both public and private capacities. When he was first elected mayor, he resigned as a director of the Bank of Finance, a small minority-owned bank whose directors included Bishop H. H. Brookins and Councilman Gilbert Lindsay. At the time, the bank was soliciting deposits from government agencies.
Decision to Step Down
“I didn’t want that relationship to raise any questions,” Bradley said then in explaining his decision to step down.
But five years later, Bradley agreed--at Valley Federal’s request--to become a director for the Van Nuys-based savings and loan.
The mayor said the firm was not seeking to conduct business with the city and “was trying to reach out and add to their board a black and a Hispanic.”
Bradley should have resigned from Valley Federal a long time ago, mayoral challenger Holden said. “He should get off now, absolutely.”
For fees of $1,500 per month, Far East National Bank used Bradley’s name on its stationery and tapped the mayor’s advice on international trade.
‘Lot of Recognition’
Banking analyst Gerry Findley described the advisory fees as “very high.”
“That’s a lot of recognition,” said Findley, a veteran California banking analyst and author of the authoritative Findley Reports.
Bradley has refused to comment on the services he provided Far East bank before resigning his position in December, but Deputy Mayor Mike Gage said the mayor did not know his name was being used on bank stationery.
Bank officials have not returned requests for comment on Bradley’s role at the bank and his decision to return the funds.
On Wednesday, Holden requested that the city treasurer withdraw all city funds from Far East and seek to have the district attorney investigate whether any laws were violated by the bank in entering into the agreement with Bradley. He said he would amend his motion for investigation to include any relationship between Bradley and Valley Federal and Drexel Burnham.
Holden noted that in 1984, Bradley approved a City Council motion to select Drexel Burnham as part of a team to issue tax-exempt bonds of up to $125 million to finance construction of multifamily rental housing.
Recently, a Drexel Burnham official said the firm solicited Bradley’s help in lobbying the Securities and Exchange Commission to abandon efforts to force the firm to move its high-yield bond department from Beverly Hills to its New York headquarters as part of settlement talks in the securities fraud civil suit. Bradley then telephoned House Assistant Majority Leader Tony Coelho (D-Merced) in Washington, asking for his assistance on behalf of Drexel Burnham, one Coelho aide said.
A Bradley spokesman said the mayor made the call on his own because he believed that it was in the city’s interest to have the firm stay in the area.
Bradley has received nearly $60,000 in political contributions from Drexel Burnham since 1983, and the limited partnership he obtained through the firm is valued at between $10,000 and $100,000, according to records on file at City Hall.
Gage said the mayor has no financial interest in Drexel Burnham, and that the firm acted merely as a broker for Bradley’s investment.
Times staff writers John Kendall, Frederick M. Muir and Scot J. Paltrow and Times researcher Cecilia Rasmussen contributed to this article.