Ferraro Seeking to Bolster Probe : Council President to Urge Oaths for Witnesses in Bradley Inquiry

The president of the Los Angeles City Council, seeking to better arm the city lawmakers as they wade into an investigation of Mayor Tom Bradley, said Tuesday that he will ask that the council place witnesses under oath and, if necessary, employ subpoena power and hire special counsel.

John Ferraro was expected to make his recommendations today to the city’s governing body and said he had already obtained the support of key members.

The move to bolster the council’s investigative arsenal follows two days of sometimes-conflicting testimony before a council committee and comes amid growing impatience with City Atty. James K. Hahn, who this spring was assigned by the council to determine whether Bradley sought special city treatment for business associates.

“Jim Hahn talks rather slowly, and I think the investigation is moving rather slowly too,” Ferraro told reporters Tuesday.

Ferraro said the council needed oath-giving and subpoena powers to make sure potential witnesses testify and do so truthfully.

While nobody has declined to testify so far, council members have complained of conflicting and confusing testimony.

Testimony is expected to become even more contradictory this week as at least one staff member in City Treasurer Leonard Rittenberg’s office told The Times that he is prepared to contradict the treasurer’s version of events surrounding the controversial deposit of city funds in a bank that employed Bradley as a consultant.

City investment officer George Sehlmeyer said in an interview late Tuesday that he stands ready to refute Rittenberg’s version of events surrounding the deposit.

Tuesday, Councilman Zev Yaroslavsky, chairman of the Finance and Revenue Committee, which is holding hearings into the Bradley matter, told Rittenberg, a key figure in the probe, “What drives me crazy is that you are all over the map.”

In addition, a key council member complained about the multiplicity of probes of Bradley. Besides Hahn’s office and Yaroslavsky’s committee, the Government Operations Committee is investigating, as are City Controller Rick Tuttle, the city administrative office and the Los Angeles Police Department.

Councilwoman Joan Milke Flores told Ferraro that a super-committee should be considered “to coordinate the investigation, so that those investigating will know what other people are doing. . . .”

It added up to a growing desire among council leaders to take charge of the investigation. Leading that drive were Ferraro and Yaroslavsky, who are not usually political allies but have been drawn together on this issue.

Both have been Bradley foes, Ferraro running against the mayor in 1985 and Yaroslavsky coming close to challenging him this year. Joining them was Flores, one of Bradley’s strongest supporters, who said in a statement Tuesday: “The areas of grayness should not be allowed to linger any more. Mayor Bradley supporters would like to hear what happened from him.”

With his council support dwindling and demands for a stronger investigation increasing, Bradley also asked for a quick end to the probe Tuesday. But at the same time, he made it clear that he has no intention of ending the matter with an abrupt resignation.

Should the mayor resign, he would be replaced by the City Council president, according to the City Charter.

Flores on Monday had said that if it turns out Bradley used his office to help business associates, “he must assess his position to see if it is so damaging to the city that he should resign.”

Asked about that Tuesday, Bradley said briskly, “Listen, to anyone who has any such thoughts, I’ll be around four years from now as mayor of the city.”

Council unhappiness with Hahn spilled over after a city fiscal auditor, rather than one of Hahn’s investigators, learned of the removal from a document of a phrase--”per the mayor”--indicating that Bradley had directed the deposit of $2 million in city funds with Far East National Bank. Bradley had been employed by the bank as an adviser.

Bradley and Rittenberg both deny the mayor influenced the deposit decision.

There is also unhappiness with Hahn elsewhere in City Hall. Tuttle said he had won a promise from Hahn’s office to prosecute a Bradley friend, Juanita St. John, for failure to comply with his subpoena for records showing how she spent $180,000 in public money on the Africa Task Force, a trade and cultural promotion group she headed.

Then when Hahn declined to prosecute, as Tuttle had been promised, the controller said, “I’m disappointed that I don’t have that commitment . . . that I thought I did and I told him so.”

Hahn was not available for comment on the issue Tuesday.

In response to an inquiry about the council disappointment that the city administrative officer, rather than Hahn’s investigators, made the discovery of the document alteration, Hahn said through a spokesman, “We are not going to comment on the ongoing investigation.”

Councilman Michael Woo, however, said Hahn had told him his investigators had learned of the alteration before it was revealed by the city administrative office.

However, a source close to the investigation said Hahn’s office was not aware of the information until after it was uncovered by the city administrative office.

In the second day of testimony before the Finance and Revenue Committee, Yaroslavsky continued to chip away at Rittenberg, seeking in vain to learn why the treasurer ignored city policies when placing $2 million in Far East National Bank without soliciting competitive bids.

Rittenberg again told the committee that he directed that the funds, originally $1 million, be placed with Far East after a telephone conversation with Bradley and upon learning that his (the treasurer’s) staff had withdrawn all funds on deposit with the bank only two days earlier.

The March 22 telephone conversation has become perhaps the most pivotal element in the unfolding scandal over whether Bradley used his official position to advance his private interests.

It was after this conversation that the treasurer instructed his staff to immediately double to $2 million the city’s deposits in Far East.

For the past several months, Bradley has said that he contacted Rittenberg after receiving a call from Far East’s president, who had asked whether the city was dropping its policy of depositing funds in local banks.

Bradley said he called Rittenberg to verify the bank president’s report. It was then, the mayor has said, that he learned for the first time that Far East was doing business with the city.

Two days later, amid media inquiries about his links to the bank, Bradley returned $18,000 in consultant fees that he had received last year from Far East.

At his press conference Tuesday, however, Bradley seemed to change his account of the crucial conversation. He said he called Rittenberg, not to inquire generally about city investment policy, but to “confirm a statement that was made to me that a deposit, which had been made to Far East National Bank, was being terminated.”

That conflicted with Rittenberg’s testimony before the committee Monday. At that time, Rittenberg said Bradley merely inquired whether the city had money deposited in Far East.

Rittenberg, during his testimony Tuesday, was also unable to shed any light on who was responsible for whiting out the “per the mayor” notation.

The reference was originally written on a paper listing interest bids for deposits by Sehlmeyer. But Rittenberg said Sehlmeyer and city cash manager Bill Hoss are accusing each other of whiting out the phrase.

Apparently, Rittenberg said, the bid sheet was altered even more after he saw it. When he was shown the document by city auditors, a black mark had been made on the back of the document to further obscure the notation about the mayor.

After the council hearing, Sehlmeyer said he wrote the phrase “per the mayor” as a “reflexive” action after being informed by Rittenberg that the mayor had called about the Far East deposits.

“I was stunned that the mayor even would have called on the account,” Sehlmeyer told a crush of reporters outside the hearing room Tuesday. “I had no idea that the mayor was in any way involved. So my putting that down was probably just a stunned reaction (of my) finding out that the mayor made a call (to Rittenberg) about it.”

Sehlmeyer said in the interview Tuesday night he is prepared to testify that a phony bid sheet indicating that Far East had won the deposit through competitive bidding was concocted only after reporters began asking the treasurer’s office about the bank.

Sehlmeyer said he has documents--including copies of the bid sheet--to back up his version of events, and on Tuesday, he turned those documents over to the city attorney’s office.

Those documents, copies of which were examined by The Times, indicate that references to Bradley were deleted with white correction fluid after the papers left Sehlmeyer’s possession.

Sehlmeyer and Hoss were expected to be called to testify before Yaroslavsky’s committee today and Thursday.

Rittenberg on Tuesday also answered questions about why bids from Gibraltar Savings & Loan Assn. had been altered. City auditors have identified several instances of changed bids from Gibraltar, although they did not speculate on the motive for changing them.

Gibraltar replied in a statement that it had no special benefit from its transactions with the city.

Times staff writers Joel Sappell and Tracy Wood contributed to this story.