Documents Challenge Bradley on Bank Ties : Papers Indicate He Knew That City Was Doing Business With Firm While He Was Paid Adviser

Times Staff Writers

Los Angeles Mayor Tom Bradley, contrary to past denials, apparently knew that the city was doing business with Far East National Bank while he was a paid member of the bank's board of advisers, according to documents made available to The Times.

Moreover, some of the documents, as well as interviews with city officials, indicate that actions taken by Bradley's office prompted the city treasurer's office to work more closely with the bank.

The documents, along with comments of bank President Henry Hwang, present a picture of a mayor using his influence to advance the interests of a private firm by interceding with city agencies. The city attorney's office is probing Bradley's role as a paid adviser to two local financial institutions that do business with the city.

In an interview Friday, Hwang said Bradley was hired by his Far East National Bank because he is the kind of person whose influence can be helpful to the bank.

"Well, basically, we talk to a different kind of people," he said.

"And if they can be helpful to us, you know, in doing different things, like (Bradley) in foreign trade, whatever, you know, you generally have to pay people for things . . . for, you know, for services rendered in the future, whatever. . . . That's all. So, that's normal. For (the) bank to go out, look for business, talk to different people, especially in a position of influence, that's not a big deal," Hwang said.

Bradley was the only one of the 46 members of the bank's advisory board to be paid, Hwang said.

Hwang confirmed that the bank had business with the city at the time the mayor was employed in 1988.

"Yes, we did," he said.

The documents are correspondence and memoranda from city officials responding to questions by Bradley about the city's financial dealings with the bank. The mayor's office assembled the documents after reporters began asking questions about the city's relationship with the bank. The Times obtained the documents through the California Public Records Act.

The documents challenge the mayor's version of his dealings with Far East. He has contended that he has done nothing wrong by being a paid adviser to two local financial institutions doing business with the city.

Bill Chandler, assistant press secretary to the mayor, said Friday that Bradley would have no comment on either the documents or the interview with Hwang.

The mayor has insisted that he knew nothing of the bank's relationship with the city until last month during his reelection campaign, when his ties with two financial institutions became an issue.

Paid Member

At that time, Bradley was asked by reporters to explain his relationship with the bank. Bradley acknowledged that he had been a paid member of the bank's board of advisers, but he said he did not know of the bank's relationship with the city until the city treasurer made him aware of it March 22.

Soon after that, Bradley paid back the $18,000 in fees he had received from the bank. He said he told the bank that he was resigning from its advisory board last December.

But the documents show that Bradley's office made inquiries last year to the treasurer's office and to the Los Angeles Community Redevelopment Agency on behalf of Far East while he was serving as a paid adviser to the bank. The answers to the inquiries showed that the city was doing business with the bank during 1988 while he was on its advisory board.

In a May 26, 1988, memo to the CRA's chief financial officer, CRA Administrator John Tuite said: "The mayor called me yesterday regarding Henry Hwang, president of the Far East National Bank. Mr. Hwang seems to be looking for depositors and has been having difficulty, as it seems there are certain city agencies that have requirements that keep them from depositing in his bank."

Two weeks later, on June 10, Tuite sent a letter to the mayor saying that the CRA had a longstanding financial relationship with the bank and currently had $525,000 on deposit at the bank and indicated that it was unlikely that the amount would be increased because the bank's investment policies did not offer the city the highest return.

Tuite said in an interview Friday that he interpreted the mayor's inquiry as "a reflection of a conversation with Henry Hwang that Hwang wanted more deposits."

Pierre Lorenger, the CRA's deputy administrator for finance, also said Friday that he regarded the mayor's inquiry as part of a campaign by Hwang to get more deposits from the CRA.

"I know Henry Hwang. He's an aggressive guy," Lorenger said. "I figured Henry's doing it again. He's calling up again trying to find out how he can get more money. But now he's calling the mayor."

Tuite and Lorenger said that deposits were not increased after the mayor's inquiry and that, by November, the CRA had begun to withdraw the $525,000 as part of an effort to consolidate its deposits in a smaller number of banks.

Lorenger said the agency stopped using Far East because the bank would only invest the CRA's money in certificates of deposit that did not pay as much interest or afford as much flexibility as would federal securities.

Other documents detail Bradley's interest in the city treasurer's financial dealings with Far East.

In January, 1988, Bradley's office received a letter to the mayor marked "personal and confidential" from Hwang saying: "We wish to express our interest in receiving deposits and rendering bank services to the City of Los Angeles. Therefore, we would appreciate your consideration in assisting minority enterprises such as ours during this new year."

Records show that the city had been depositing funds with Far East as early as 1979.

Hwang's letter was forwarded to City Treasurer Leonard Rittenberg. In a Feb. 12, 1988, letter addressed to Bradley, Rittenberg said a one-year deposit of $1 million had been placed with the bank in 1986 but was not renewed when it matured because "the bank's bid was not competitive with other available investments."

Rittenberg went on to say that his office had begun working with the bank to help it qualify for new deposits.

Instructions Given

"The Cash Management Division had previously requested Far East National Bank to update its contract for the deposit of moneys, safekeeping and collateralization requirements. Since this was not done by the bank, I have now instructed the cash management officer to personally walk through these agreements with them.

"If these conditions are met, then the city and Far East National Bank should continue to maintain its . . . relationship," Rittenberg said.

Rittenberg said in an interview Friday that he took a special interest in Far East "as a courtesy, because I received a letter from my boss." Rittenberg said it is not unusual for him to get inquiries from the mayor's office or from City Council members on behalf of banks. When he does, "I forthwith pick up the phone and make calls to tell them how they can do business with the city."

Six weeks after Rittenberg's letter to the mayor, the city deposited $1 million with the bank in a certificate of deposit that matured March 22, 1989. When the funds matured, the city asked the bank to return the funds.

Hwang then telephoned Bradley to inquire why, according to earlier interviews with Bradley. Bradley has said that he then called Rittenberg to find out whether the city had been doing business with the bank.

The next day, the city deposited $1 million with Far East, and several days later deposited an additional $1 million, a record high city deposit for Far East.

In March, a Rittenberg spokesman told The Times that the withdrawal had been a mistake.

Rittenberg said in an interview Friday that in neither case did the city give the bank deposits because of the mayor's call or letter. Rittenberg said that he cannot be sure that the mayor saw the letter that he wrote in response because it was written to the attention of one of the mayor's aides. It was, however, addressed to Bradley.

Aware of Documents

A spokesman for City Atty. James K. Hahn acknowledged that city investigators are aware of the documents. But he would not comment further on what possible impact they may have on the the ongoing investigation into Bradley's relationship with Far East and Valley Federal Savings & Loan Assn., on whose board Bradley served for years and was paid at least $150,000.

Federal banking officials confirmed this week that they are currently examining Far East but would not comment further, except to say the examination was "previously scheduled and routine."

Hahn is scheduled to report his initial findings to the City Council's Governmental Operations Committee on Wednesday.

Committee Chairman Michael Woo, after being told of the documents' contents, said he found them to be "very damaging. . . ."

"They appear to contradict the mayor's earlier statements," he said.

Woo said his committee will attempt to "ascertain the facts" but at this point is not ready to request an independent investigator, as has been called for by some council members.

"My staff and I will be talking about options available to this committee, which includes the possibility" of a special prosecutor to take over the case.

The City of Los Angeles' code of ethics, adopted in 1959 and revised in 1979, bars public officials from engaging in any business or transaction that "impairs their independence of judgment in the discharge of their duties."

But the 14-point code, titled a "Statement of Approved Principles for Public Service," carries no penalties.

The California Political Reform Act prohibits a public official from making a government decision in which he has a financial interest. That means public officials who serve in private firms must disqualify themselves from participating in any decisions that affect the firm, according to the Fair Political Practices Commission.

But an FPPC spokeswoman said recently that Bradley is not covered by the law because the City Charter has no provision for the mayor to abstain from official actions.

Times City-County Bureau Chief Bill Boyarsky contributed to this report.

BANKER TELLS HIS SIDE

Henry Hwang of Far East National Bank discusses his role in the Bradley affair. Page 27.

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