Bungling in Aftermath of Fire Seen : Arson, Discovery of Asbestos Reportedly Cripple 3 Agencies

An arson fire and the subsequent discovery of asbestos in a Wilshire district high-rise have crippled three key state agencies for nearly five months and will cost the state more than $3 million, according to testimony before a state Assembly panel Tuesday.

After a four-hour hearing, Assemblywoman Delaine Eastin (D-Fremont) concluded that officials seriously mismanaged cleanup and relocation operations in the aftermath of the March 2 blaze on the 15th floor of the CNA building. State officials blame the fire and asbestos for forcing more than 500 state employees to leave the building.

“I think it’s a case of plain, old-fashioned bureaucratic bungling,” said Eastin, chairwoman of the Assembly Committee on Governmental Efficiency and Consumer Protection.

State fire marshals previously announced that they have identified a suspect in the arson, but no arrests have been made. The fire aroused suspicion here and in Sacramento because of the sensitive nature of some of the work performed by the displaced agencies.

Employees’ Testimony

And Tuesday, in testimony before the Assembly committee, employees said their work is still suffering in the aftermath of the fire, which they said destroyed documents and spewed asbestos fibers on numerous boxes of files.

Despite efforts to carry on, the employees testified, investigations by the Savings and Loan Department have been slowed, lawsuits filed by the Corporations Department may be in danger and the Banking Department has only limited access to its central computer.

“What we have lost is some productivity,” William Davis, chief deputy commissioner for Savings and Loan, said while emphasizing that “no regulatory crisis” had occurred. “It takes longer to do an examination.”

Because the agency’s computer will not be hooked up until it moves into permanent headquarters next month, Davis said, examiners can no longer feed data on portable computers into the main system from the institutions they are probing.

“This is not acceptable,” Eastin said, scolding the General Services Department, which handles leases for all state entities, for failing to relocate the agencies more swiftly.

“The bottom line is that 4 1/2 months is too doggone long not to have your computer up,” she said. “When four of the most important agencies in state government are affected, you move lock, stock and cat to get them working again.”

The fourth agency affected was the Insurance Department, where officials reported they had largely recuperated because they had already been planning to move before the fire.

Officials from the General Services office, for their part, blamed delays on the discovery of asbestos and what they described as the uncooperative attitude of the building’s owner, Arthur Blech.

Blech, in separate testimony, said that experts he hired had determined that the asbestos was not a problem because it was below the legally permissible level--despite a CAL-OSHA report that warned of “potential risks” from the fibers.

Blech maintained that his building was sufficiently cleaned up for state employees to move back within two weeks of the fire. He suggested that state officials were looking for a pretext to move and denied that he had “schemed” to force out the state agencies so as to make room for better tenants.

“I am interested in making money,” Blech said. “It would be insane for me to get the state out. . . . As a businessman of some repute, it would be insane to plan . . . a financial loss.”

Leases With County

Blech recently signed leases with the county to provide office space for the Department of Health Services and the Superior Court system. He said the county’s lease is for 25 years with an option to buy the building.

In other testimony, representatives of the four displaced agencies tallied costs from the fire, the relocation and the cleanup at $3.239 million. About $430,000 of that is for pay to employees who could not work because there was no room in the temporary quarters where the agencies relocated. Other of the costs would have been incurred anyway because of planned moves.

Eastin also concluded that the state apparently broke its own law requiring that employees be notified when they work in a building with asbestos. CAL-OSHA had detected the asbestos in mid-March after the fire, and some employees did not receive notice until May, she said.

At least one complaint filed by a union representing state employees is pending.