NEWS ANALYSIS : Council Took the Pragmatic Approach

As much as the City Council members wanted Treasurer Leonard Rittenberg to go, they had some pragmatic reasons for keeping him around on a lucrative $50,000 consulting contract.

Council members said Wednesday that much of the treasurer’s office policies, procedures and history are carried only in Rittenberg’s head and the city needs to get it all down on paper before he leaves for good.

“He’s the only one who knows where the bodies are buried,” said Councilman Zev Yaroslavsky, chairman of the Budget and Finance Committee that oversees the treasurer’s office. “One of his great weaknesses--and what finally got Leonard into trouble--is that rules were never reduced to writing.”

The council voted Wednesday to accept a settlement allowing Rittenberg to resign rather than to be fired for his role in a scandal involving the mayor and a downtown bank.

But even as council members agreed that Rittenberg had to leave after 2 1/2 years at the helm, some council members said they still respect his talents as a prudent investor of a $2-billion portfolio.

“As troubled as his office has been, he has an expertise that cannot be ignored,” said Yaroslavsky. Councilman Richard Alatorre, vice chairman of the council’s Revenue Committee, added, “He’s been there 22 years, he’s got something to offer.”

Under the settlement approved by the council on Wednesday, Rittenberg will retire June 1 and be paid $50,000 as a consultant for the remaining six months of the year.

But while Rittenberg was respected as a technician, he was condemned as a poor manager who allowed the department to fall into disarray--particularly during the scandal over an investment he made in a bank that had employed the mayor. Rittenberg invested $2 million in Far East National Bank in March, 1989, after receiving a phone call from Mayor Tom Bradley. Rittenberg has steadfastedly denied that the mayor tried to influence him.

“From a pragmatic point of view, we wanted him out as soon as possible,” said one council member who spoke on condition of anonymity. “He was a negative influence” in the department as local and federal investigations demanded more and more of his time and the loyalty of his staff was strained.

Firing Rittenberg could have resulted in Civil Service Commission appeals lasting up to a year and costing the city many thousands of dollars in legal fees, city officials said. During that time, Yaroslavsky said, the city would have been required to pay Rittenberg his regular salary of $83,415 a year.

In addition, the firing could have resulted in litigation costing the city still more, according to council members.

On the other hand, council members said, settlement guaranteed a swift and amicable exit for Rittenberg.

Rittenberg joined the treasurer’s office in 1968 as an accountant and steadily rose in the department to become chief deputy in 1981 and then was named acting treasurer in 1986 when former Treasurer Robert Odell became ill. Odell died in 1987 without returning to the job and Rittenberg was appointed treasurer by Bradley in 1987.

“We need to clean house and restore confidence in that office,” said Alatorre. “We do know that absenteeism is high and morale is low.”

Yaroslavsky said, “We have an office besieged and beleaguered by scandal and preoccupied with defending itself.”

Since the scandal first erupted in the weeks before Bradley’s close victory for a record fifth term as mayor in April, 1989, Rittenberg and his senior deputies told conflicting stories about how the $2 million came to be invested in Far East National Bank. They openly disagreed on who was responsible for the attempted cover-up of the transaction--including the infamous obliteration of a reference “per the mayor” on one document.

In the wake of the investigations, cash management officer Bill Hoss retired without returning to the office, and a senior investment officer, George Sehlmeyer, was out on leave for five months, before returning to the office last week.

Council members said the ouster of Rittenberg is only one of many changes necessary to restore credibility to the treasurer’s office.

“The office needs more than just a new treasurer, it needs a new attitude, it needs a housecleaning,” said Yaroslavsky.

Some council members privately questioned whether the return on the city’s investments--which can run into the tens of millions of dollars annually--has suffered during the last year as a result of the tumult in Rittenberg’s office. Yaroslavsky said he will ask the council on Tuesday to approve a 90-day extension of a program in which the chief administrative officer provides daily oversight of the treasurer’s office to ensure that council-approved policies and procedures are followed.

In the end, there was one other overriding factor in the council’s decision: Most members of the council like Rittenberg.

He is seen by council members and many city bureaucrats as a “nice guy”--serious but approachable, easy to work with and genuine. He is seen as a lifetime civil servant who worked hard and got ahead--only to fall victim to circumstance and his own, perhaps momentary, bad judgment.