Council Sets Aside Molina’s Call for Audit of Treasurer

An effort by Councilwoman Gloria Molina to launch an audit of the Los Angeles city treasurer’s investment policies was turned aside by the City Council on Wednesday, but Councilman Zev Yaroslavsky promised that recent questions arising over those policies soon will be answered by a committee he heads.

Yaroslavsky, chairman of the Finance and Revenue Committee, said he hopes to report to the council as early as July on whether City Treasurer Leonard Rittenberg is adhering to existing city policies in making investments and whether those policies need to be altered.

Molina cited growing public concern over the operations of the treasurer’s office and said, “We aren’t acting.” She said “allegations are surfacing in newspapers almost every other week” showing that Rittenberg has invested in banks with ties to Mayor Tom Bradley and has initiated a policy of depositing city funds in minority-owned banks that do not always pay the highest interest.

Timely and Thorough

Molina said her plan to seek a formal audit by the chief administrative officer would be more thorough and timely (due within 45 days) than Yaroslavsky’s review. But Yaroslavsky asked that her idea be referred to his committee, and the council backed him on a 10-3 vote.

Yaroslavsky said his committee and staff have met with Rittenberg, reviewed current city policy and talked “one on one” with several people involved in city investments. He said his committee’s efforts do not focus on Bradley “or any personalities,” but on the process the city uses to invest its funds.

He chastised Molina, saying it is up to the Governmental Operations Committee, chaired by Molina and Councilman Michael Woo, to look into any potential conflict-of-interest links between Bradley and Rittenberg. That committee is overseeing the city attorney’s investigation into Bradley’s ties to local financial institutions. However, the committee so far has not taken an active role in the investigation.

“I suggest (that Woo and Molina) come to the council and get subpoena power (to call witnesses) if they are not getting what they need,” Yaroslavsky said.

Political Turf

Molina described Yaroslavsky’s opposition to the audit as a political turf battle, and said she wants the full council to back an audit. She said an audit could “finally determine” whether investment criteria approved years ago by the council are being followed.

Molina noted that Rittenberg testified several weeks ago at the Governmental Operations Committee’s first hearing into how the investigation of Bradley was going. She said Rittenberg’s testimony about how his office invests city funds “led us to believe (the policy) was very inconsistent.”

Now, she said, “we need to address public suspicion that . . . implies political leverage might be involved in how the city invests its deposits.”