Treasurer’s Words Fail to Clear Air on Policies : City Hall: Rittenberg’s handling of city investment funds gets a hearing that only adds to the confusion.

More than six months after his unusual investment policies ensnarled City Treasurer Leonard Rittenberg in myriad investigations of influence peddling at City Hall, the custodian of the city’s $2-billion investment portfolio on Tuesday again confounded City Council members with a confused and contradictory explanation of his policies.

In testimony before a special joint meeting of two council committees, Rittenberg failed to explain to the members’ satisfaction his controversial policies of investing in minority-owned financial institutions.

His hourlong testimony became so complicated at one point that Councilman Zev Yaroslavsky jumped to his feet and went to a blackboard, where he made notes and diagrams in hopes that an illustration might help.

But in exasperation, Yaroslavsky called the policy a “Rube Goldberg” contraption, “made up as you go along. . . . There’s ambiguity, judgment calls and contradictions.”

Yaroslavsky said Rittenberg appeared “perplexed and confused.”

Yaroslavsky then ordered Rittenberg to meet with the city attorney’s office and the city administrative officer in an attempt to put into writing a clear statement of the city’s policy on investing funds with minority-owned financial institutions.

It was Rittenberg’s decision on March 22 to invest $2 million of city funds in Far East National Bank--without required competitive bids--that thrust him into the middle of a controversy over Mayor Tom Bradley’s earlier employment by the bank. Bradley had telephoned Rittenberg the morning the deposit was made, but both men deny that the mayor attempted to influence the treasurer’s investment decision.

Instead, Rittenberg said, the deposit was made according to his ad hoc and unwritten minority bank policy, which allows these banks to get preferential treatment, including receiving deposits without having the best bid.

The policy has been the subject of study by the city administrative officer and earlier council hearings, without being resolved. The hearings on Tuesday were intended to explore Rittenberg’s attempt to put his policy in writing.

But Rittenberg, too, was clearly exasperated with the hearing.

At one point, he offered to begin making amendments for his 1990 policy statement, even though the 1989 policy has yet to be adopted and may not be adopted before year’s end. Another time, he told the committee that he already has the authority to “pretty much give a way the store.”

“I’ve been insisting that procedures be written . . . because his procedures change moment to moment,” Yaroslavsky said. “And it’s not that I have a problem with delegating authority to people who demonstrate they have good judgment.”

Worse yet, various city departments disagree on the terms and legality of such a policy. The city administrative office and the treasurer are roughly in agreement in concept but do not agree on the exact terms. The administrative office wants the policy to be more specific in terms of how much money will be awarded under a preferential policy.

Pete Echeverria, senior assistant city attorney, said a recent U.S. Supreme Court decision may outlaw such programs.

“Unless there is a history of discrimination,” said Echeverria, “you can’t give preferential treatment.”

BACKGROUND The Los Angeles City Council ordered all city treasury policies to be put in writing, after questions were raised by deposits made to a bank that had employed Mayor Tom Bradley. Treasurer Leonard Rittenberg said the $2-million deposit awarded to Far East National Bank on March 22 was made under his unwritten minority bank policy.