Rittenberg’s Future as Treasurer Clouded as Review Process Unfolds

Despite three highly critical audits of his department, City Treasurer Leonard Rittenberg is not likely to lose his job over the deposit of $2 million in city funds with a bank linked to Mayor Tom Bradley unless he is found guilty of a felony or other serious misconduct, city personnel officials said Tuesday.

The city’s Personnel Department is now preparing a report to recommend possible disciplinary action against Rittenberg as the Los Angeles Police Department continues a criminal investigation of the treasurer and his office.

The recent reports of City Atty. James K. Hahn and City Controller Rick Tuttle both concluded that treasurer’s office employees last March had altered documents related to the $2-million deposit in Far East National Bank, which had paid Bradley $18,000 as a consultant in 1988. Tampering with public documents is a felony under California law.

The findings and recommendations of the Personnel Department will be presented to Bradley in the next few weeks and a separate but similar report will be delivered to the City Council. Then the mayor must decide what, if any, disciplinary action he will urge the divided City Council to take.

Raymond Allen, assistant general manager of the city Personnel Department, said a “whole range” of disciplinary actions against Rittenberg could be possible, including dismissal, demotion or suspension. But a recommendation to discharge the treasurer would probably require a lengthy period of unsatisfactory performance or some serious misconduct, such as illegal tampering with documents.

“If we determined at some point that a felony was committed, then we’re talking a very serious offense that’s going to lead to criminal action as well as disciplinary action,” Allen said.

‘Cloud Hanging Over Him’

But even short of criminal charges, Allen said he believes that it will be hard for Rittenberg to continue managing the treasurer’s office in the wake of the reported problems there.

“It’s going to be difficult,” he said. “Whatever we end up doing, whatever the mayor and council end up doing, however the facts end up falling, I think the city treasurer has a cloud hanging over him. . . .”

Indeed, even if Rittenberg survives the continuing investigations, he may still face a call from the City Council for his dismissal, based on what is already known.

“If it were up to me, I’d remove him,” said Councilman Nate Holden. “The evidence shows he violated the policy of his own office and the council.”

The city controller’s audit released Monday concluded that Rittenberg awarded deposits to banks without seeking the required competitive bids and on one occasion, a $1-million deposit with Far East in 1988, placed city funds with a bank that was not the high bidder.

‘Breakdown in Control’

Controller Rick Tuttle concluded there was a “major breakdown in internal control” in the treasurer’s office on March 22, the day of a critical telephone call between Bradley and Rittenberg concerning Far East. After the call, Rittenberg directed his staff to reinstate a $1-million deposit with Far East and to add another $1 million. Both Bradley and Rittenberg deny that the mayor pressured the treasurer into making the deposits.

On the same day, someone in the treasurer’s office obliterated a reference on a bid sheet that the deposits were made “per the mayor.” Treasurer’s employees also altered the document to create the false impression that Far East won the deposit as a result of competitive bidding against other banks.

Rittenberg has declined to comment on the report.

In the wake of the Tuttle report, some council members on Tuesday predicted that Rittenberg would be forced to resign, but they did not openly call for his resignation.

“Will he survive?” mused Councilwoman Gloria Molina. “I doubt it. And that is unfortunate. He’s a decent man,” she said.

“Someone will have to call for his resignation,” Molina added. “It’s not an easy decision but it is a reality that the mayor and the council will have to face.”

But even those council members who said Rittenberg should be resign or be fired agreed that there is no active movement among members to seek disciplinary actions against the treasurer, and most appear willing to wait for the Personnel Department and the mayor to make their recommendations.

Some Supportive

Some council members are openly supportive of Rittenberg.

One of his allies, Councilman Richard Alatorre, said he believes that the mayor will fire the treasurer. “They need a fall guy,” said Alatorre. “It would be a tragedy to fire someone just to make people happy that something was done,” he said. “I don’t think he should be fired.”

Councilman Michael Woo, whose ad hoc committee on government ethics will be holding hearings on the controller’s and city attorney’s reports, summed up the feelings of most of his colleagues: “At the very least, there was mismanagement . . . but on the other hand, Rittenberg has done a good job getting a good rate on interest on the city’s investments. That is what the City Council has to weigh.”

And some council members said they want to study the personnel report before making their decision. “I think everybody wants to see all the facts in one place,” said Councilman Zev Yaroslavsky.

Rittenberg, 57, was largely unknown to most council members before the myriad investigations into Bradley’s connections to Far East National Bank erupted earlier this year. The 21-year veteran of city government was appointed to the $83,415-a-year post of treasurer by Bradley and was quickly confirmed by the council in 1987. As treasurer, Rittenberg is responsible for investing about $2 billion in surplus city funds and has earned high marks for the returns the city portfolio has earned in the past two years.

The Personnel Department report on the treasurer, which had been progressing slowly until the city attorney and the city controller completed their probes, will now move into high gear, Allen said.

‘Fairly Narrow’ Focus

He said that for now, the Personnel Department investigation is focusing “only or primarily” on Rittenberg because the mayor made a “fairly narrow” request to look at the city treasurer.

Allen said the Personnel Department probe of the treasurer’s office is politically “unique” because the surrounding controversy involves “not only the city’s top politician but a city department head.” And the Personnel Department inquiry was triggered by a city administrative office management audit that was initiated by the City Council. “There’s a lot more interest (than normal) on the part of elected officials,” he said.

Allen did not rule out recommending action against others, however. “We are looking at the activities of the investment section (of the treasurer’s office) and who did what to whom, with particular regards to Far East.

“If we see things that other people did that we think bear on the city treasurer’s responsibilities, we may act on those.”