Motive Remains a Mystery in Bank Deposit Cover-Up

After a week of high drama and sensational testimony about bid-rigging and doctored records, members of a Los Angeles City Council committee said Friday that they have concluded there was a cover-up in the treasurer’s office of circumstances surrounding the deposit of $2 million in city funds into a bank that paid Mayor Tom Bradley consultant fees.

But they don’t know the motive.

“I know there are people who have come before this committee and have lied, that’s for sure,” Finance and Revenue Committee member Richard Alatorre told reporters after Friday’s brief hearing. “And I don’t know who is telling the truth at the present time because everybody pretty much has a different version of some of the major concerns to this committee.”

Added committee Chairman Zev Yaroslavsky: “The whole thing smells funny, but we don’t know where the odor is coming from. We know that there was a cover-up in the treasurer’s office. We don’t know why.”

Although no one at the hearing contradicted Bradley’s assertion that he exerted no pressure on behalf of Far East National Bank, the cover-up heightened suspicions that have dogged the mayor since his relationship with the bank was made public last spring.

What the committee said it did learn with certainty from the testimony is that there is so much squabbling and bad blood among top treasurer’s officials, who pointed accusatory fingers at each other during the hearings, that the prudent investment of taxpayer funds is being jeopardized.

“A snake pit,” is how Yaroslavsky described the office that manages about $2 billion in public funds.

As its only legislative act, the committee on Friday passed a motion stating that “it is imperative” for the city to obtain an outside investment or accounting firm to help the treasurer’s office fulfill its duties.

The hearings resume next week but are not expected to produce any startling revelations. They will focus on city policy implications raised in testimony this week.

Officials Testify

During five days of extraordinary public hearings, the council committee summoned three of the city’s top financial officials--including Treasurer Leonard Rittenberg--to answer allegations leveled by city auditors that they doctored a document to conceal the circumstances surrounding the Far East deposit on March 22.

The underlying thrust of the hearings was to determine whether the document was falsified to conceal that $2 million had been deposited in Far East at the mayor’s direction.

White correction ink was used to blot out the phrase “per the mayor” on a “bid sheet” that reported the deposit. The document also was altered to show that the money had been awarded through a mandated competitive bidding procedure that did not take place.

Last year, Far East paid Bradley $18,000 as its only paid adviser. Bradley has said that after learning the city was doing business with Far East, he returned the money and resigned his position.

For months, despite his denials, suspicions have continued that Bradley exerted influence in a call to the treasurer on the same day the money was deposited. There was no testimony during the hearing that Bradley did anything other than inquire about the status of Far East’s account with the city after learning from the bank president that city funds were being withdrawn.

Although Rittenberg and Bradley differ on some details of that telephone conversation, Rittenberg backed Bradley’s assertion that the mayor did not direct the treasurer to deposit funds in Far East.

Nonetheless, after the call Rittenberg directed a subordinate, George Sehlmeyer, to deposit $2 million in Far East. The treasurer has said this was consistent with his previous practice and policy of depositing funds in minority-controlled banks. Although Rittenberg said he made that decision on his own, the document recording the transaction was filled out by Sehlmeyer “per Leonard Rittenberg, per the mayor.”

That was the document later altered with correction fluid.

Rittenberg, Sehlmeyer and another top official in the treasurer’s office, William Hoss, gave conflicting accounts of who altered the document and when it was changed.

Those conflicts remained unresolved Friday and Yaroslavsky called on his council colleagues to hire “professional legal” expertise to help them conduct a sweeping review of not only the mayor’s conduct but of departments throughout the city.

“The council has got to decide where it wants to go now,” he said. “They know a lot of things now they didn’t know when they walked into this building on Monday morning. . . . If this hasn’t troubled the City Council members, I don’t know what will.”

Meanwhile, Councilwoman Joan Milke Flores on Friday introduced a motion that would consolidate the numerous ongoing investigations into one “super-committee”

She said there are probably six different council committees or city agencies currently conducting investigations and “each is off trying to do their own thing” in a “kind of frenzy.”

IN TREASURER’S OFFICE-- Testimony has not painted a pretty picture of the city treasurer’s office. Part II, Page 1.