Probe Focuses on Bradley Telephone Calls With Bank

City Atty. James K. Hahn’s inquiry into Mayor Tom Bradley’s financial affairs is centering on a crucial one-month period this year when the mayor received and made telephone calls about city deposits in Far East National Bank, which had paid the mayor as an adviser.

More details of the investigation surfaced Tuesday as Hahn prepared to testify today at the opening hearing of a City Council committee investigating Bradley’s connections with the bank, which had paid him $18,000, and with Valley Federal Savings and Loan Assn., which paid him up to $24,000 a year for serving on its board of directors.

Sources in the office of Treasurer Leonard Rittenberg told The Times that Hahn’s investigators are asking treasurer’s employees questions about the one-month period between March 7 and April 7. Hahn has requested all correspondence in Rittenberg’s office written or received within that period, and any record of telephone calls between the mayor and treasurer.

While Rittenberg refused to talk to reporters Tuesday, and placed a gag order on his staff, details of the investigation were gleaned from interviews and from documents previously released to the press by Bradley’s office in response to requests under the California Public Records Act.

A source in Hahn’s office said that those documents will be part of the city attorney’s investigation.

The first telephone call under investigation came from Far East President Henry Hwang to Bradley on March 22. As Bradley told it, Hwang asked about rumors that the city was about to end its policy of depositing money in small minority-owned banks.

Role as Paid Adviser

Bradley, who received money from Far East for serving as the only paid member of its 46-person board of advisers, had said he learned for the first time in a March telephone conversation with Rittenberg that the bank held city deposits. Later, documents showed that Bradley apparently knew the bank and the city did business while he was serving as a paid adviser last year.

Rittenberg put $1 million in Far East Bank the day after the conversation with Bradley and another $1 million a few days later.

The documents range over many aspects of city government, from the Board of Harbor Commissioners to city pension funds. Officials declined to shed light on the documents.

Among the documents is a list of funds the city has deposited with Far East Bank in the past 10 years. Money from the General Fund, which is supported by taxes and finances general city operations, makes up most of the deposits. But airport construction funds and recreation and parks money also were deposited in the bank. The bank also had deposits from the Los Angeles Community Redevelopment Agency.

Another document showed that the bank attempted to participate in a program of making government subsidized low-interest loans in the Chinatown area. The request was turned down, and the program was given to the Bank of America.

Other documents made available to The Times show how Far East has had close connections with the city since the early 1970s, when it was given permission to build a Chinatown branch on land owned by the city.

The documents showed the bank was charged an initial rent of $200 a month, which went up to $400, then $1,000 and $2,000. Eventually, the rent went to $5,000 a month.

The rent, especially the initial charge, was the subject of controversy, with city officials saying it was too low.

The documents show Councilman Gilbert Lindsay, who represented the district, speaking up for the bank in the negotiations over the lease. And they showed that Bradley also assisted in writing a letter that supported the bank’s bid for 37 additional parking places on an adjacent city lot.

$1 Million in Pipeline

In addition, the existence of another city bank account at Far East was revealed.

This account, operating since the mid-70s, had been set up to receive money from the federal government for a transit project, a downtown “people mover” that eventually was killed. After the project was terminated, more than $1 million remained in the pipeline.

During August, September and October in 1987, documents show that money was kept in a checking account in the bank, drawing no interest for the city but enabling Far East use of the funds. That cost the city tens of thousands of dollars.

The existence of this interest-free account is important because it raises the question of whether the account was a benefit for the bank that came from its association with Bradley.

Three city officials interviewed by The Times gave conflicting accounts of why the money was not put to better use. They also were unable to say who established the account or selected Far East for the business.

Anton Calleia, a top Bradley staff member who supervised the account, said he did not know who set up the account. “I had no authority to pick the bank,” said Calleia.

Calleia said he was surprised that the money was kept in a non-interest account for months after he had sent a letter to Controller Rick Tuttle ordering it to be transferred to the Community Redevelopment Agency for closing down the defunct transit project. He provided a copy of that letter, dated June 22, to The Times.

Asked if he had anything to do with keeping the money in the non-interest-paying account, Calleia said, “categorically and absolutely no.”

A Tuttle aide said the funds were not spent until the controller received an order from federal officials. Treasurer Rittenberg, who had the authority to make more productive use of the funds, declined to comment.

The Times also learned additional details of Bradley’s connection to the bank.

Sources said that he and the bank terminated their relationship at the end of 1988 by mutual consent. Bradley, sources said, had been paid in 12 monthly payments throughout 1988, for serving on the bank’s board of advisers.

Bank President Hwang, unhappy with the impact of the investigation, called his executives together Tuesday morning and told them that publicity from the probe was unfair and potentially harmful to the small institution he had founded in the early 1970s.

After the meeting, Hwang said stories had hurt him in the eyes of friends. “I don’t want to be harried like I was a political football,” he said.

The investigation is headed by a veteran conflict-of-interest specialist, Deputy City Atty. Charles Goldenberg. Two Los Angeles Police Department investigators also have been assigned to the case.

PROBE MAY WIDEN--A reluctant City Council is considering whether to join the inquiry into Mayor Bradley’s activities. Part II, Page 1