Panel Set to Grill City Treasurer on Deposit Practices

The City Council today will question City Treasurer Leonard Rittenberg about his controversial ad hoc policy of steering lucrative city business to select minority-owned banks--including one that had employed Mayor Tom Bradley as a paid adviser.

The Governmental Operations Committee of the City Council, which is conducting an inquiry into the mayor’s ties to two local financial institutions and a trade association, has asked Rittenberg to supply more information on his unusual investment policy that was put into writing as a policy statement only last Friday.

‘Loosey-Goosey’

At a similar committee hearing last week, some council members said they were stunned to learn that millions of dollars was being invested under what Councilwoman Joan Milke Flores called “loosey-goosey” standards.

In addition to its exploration of the treasurer’s policy of giving minority-owned banks deposits at below-market interest rates, committee members were expected to grill Rittenberg about how he allowed more than $1 million in city funds to sit in a non-interest-bearing account at Far East National Bank for more than three months during 1987.

Far East has been at the center of the committee’s examination--and a separate investigation by the city attorney--since the mayor disclosed that he had been a paid adviser to the bank while the bank was doing business with the city.

The idle account at Far East cost the city about $12,000 in lost interest, according to papers Rittenberg filed with the committee in anticipation of today’s hearing.

No Explanation

In his letter to the committee, Rittenberg said his department’s procedures had “operated perfectly for the first 27 deposits” and the city lost no interest on funds it transmitted through the checking account at Far East over a previous eight-year period. In earlier interviews, Rittenberg said it was an error by his office to leave the money idle, but in his letter to the committee he offered no explanation for how it occurred.

Meanwhile, a spokeswoman for the city controller’s office said it plans to finish its special audit of the city’s business arrangements with Far East National Bank and release the results along with its regular annual audit of the city treasurer’s finances by June 30. The treasurer controls a $2-billion investment portfolio.

The Fair Political Practices Commission, which had earlier said it would begin its own inquiry, has now decided to take a back seat to the city attorney’s investigation.

The FPPC has decided not to conduct its own inquiry into possible conflict-of-interest violations by Bradley, but rather will work with the city attorney’s office on its investigation, said Sandra Michioku, a spokeswoman for the political watchdog agency. Michioku said Thursday that an independent investigation would be “redundant.”

‘Ongoing Contact’

“For the present, we are deferring to the city attorney,” she said. “If there is a need for us to get involved (later), we will.”

Sources said the city attorney’s office and the FPPC have had “ongoing contact” regarding the investigation.

The city attorney’s investigation is apparently still focused on Far East National Bank.

Sources at the city attorney’s office have said they plan to complete the inquiry into that financial institution before moving on to Bradley’s relationship with Valley Federal Savings & Loan Assn., where he was a paid director for 10 years.

A spokeswoman for Valley Federal said Thursday that the firm had not yet been contacted by the city attorney.

Mayor’s Office Upbeat

Despite the continuing inquiries, the mood in the mayor’s office was upbeat in the aftermath of Bradley’s brief appearance before the City Council on Wednesday--when he acknowledged that his outside employment had been a mistake.

Deputy Mayor Mike Gage said the mayor “feels better” about the controversy after having made the statement.

“I think he feels better about having addressed it and getting it off his chest,” Gage said Thursday. “Consequently, I am happy because I know he has dealt with it and he is moving on. . . . What the mayor did, he did for himself. It was a personal decision and a personal statement.”

Bradley spokesman Bill Chandler said the mayor’s office received dozens of phone calls on Thursday from constituents who had heard or read about Bradley’s appearance before the council. “Ninety-five percent of them are in support of the mayor and his words (Wednesday),” Chandler said.

Some Criticism

Several council members have criticized the mayor for limiting his remarks to his employment by private firms, which is just one aspect of the city attorney’s investigation into Bradley’s finances. Council members also wanted to know if the city’s interests were compromised by the mayor’s financial relationships and about some apparent discrepancies in Bradley’s explanations of his activities. Gage said the focus of Bradley’s statement was intentional.

“That is what he believes is the error in judgment,” Gage said. “And that is--as far as he is concerned and the rest of us are concerned--the only error here.”

Still, the City Council is using the episode to revive important legislation on ethics in city government that has been collecting dust for several years.

At its meeting today, the Governmental Operations Committee will take up discussion of proposed ordinances--first introduced in 1987--that would tighten laws for registration of lobbyists and regulate activities of government officials returning to the private sector.

The committee will also consider a motion that would make the current city code of ethics into law.