Port Agent’s Spending Questioned by Auditors : Trade: But $450,000-a-year tab by Tokyo representative is defended as crucial to keeping the harbor competitive.

Los Angeles city auditors have been engaged in a “running battle” with the port’s Tokyo-based trade promoter, whose outlays for salary, entertainment, private clubs and other expenses have risen to more than $450,000 a year.

A new port contract approved earlier this year for Shuji Nomura, a full-time Japanese agent, is up nearly one-third from two years ago, and Nomura’s salary, the equivalent of $127,000 a year, is among the highest in city government, records and interviews show.

Port officials have authorized a series of expenditures that the city’s fiscal watchdogs have repeatedly criticized, including nearly $100,000 for several club memberships, dinner parties and other entertainment; more than $10,000 a year for limousine services, taxis and daily commuting, and $8,400 a year for subscriptions.

“It’s just a running battle. . . . A lot of these things I just don’t believe are legitimate business expenses,” said Chief Auditor Ray Green, who reviews Nomura’s expenses for the city controller’s office. “I just feel anything that comes up over there, Mr. Nomura feels he can go ahead and do it.”

Norman Arikawa, chief accountant with the port, also raised numerous questions about Nomura’s spending before the job of auditing the expenses was taken away from Arikawa last year.

Top port officials are out of the country traveling or on vacation this week, and spokesman Dennis McCarbery referred questions to Nomura, who said the outlays for promotion in Japan are reasonable and crucial to keeping the harbor competitive.

“We are fighting very severely” for business against other U.S. ports, Nomura said in a telephone interview from Japan.

His efforts, Nomura said, helped Los Angeles pass New York last year to become the leading cargo handler in the United States.

The mayor’s office agreed, saying Nomura’s work “speaks for itself. L.A. is the biggest port of entry for trade from Japan and the city has reaped the economic benefits.”

The port, with an operating budget of about $80 million, handles $45 billion in cargo per year. Its revenues are derived from leases and other fees, not from city taxes.

Bill Chandler, spokesman for Mayor Tom Bradley, said he was not familiar with the details of the disputed expenses but added that the mayor insists that all city contracts provide services for the minimal cost.

Steep increases in spending on travel and entertainment by the semi-independent Los Angeles port and airport departments have been a sore point with City Council members, who face a growing budget crisis that threatens basic services. The Times reported last month that spending on travel by port commissioners, executives and staff had nearly doubled in six years to more than $600,000 a year.

The Port of Long Beach, the second-busiest on the West Coast and third-busiest in the nation, spends about one-tenth as much as Los Angeles for a part-time trade representative in Japan. Officials in Long Beach say having a full-time agent in high-priced Tokyo is too costly and provides no particular advantage.

“We’d rather have someone . . . who can assist us when required,” said Don Wylie, Long Beach harbor’s director of trade. “It’s not the kind of thing where you need someone out pounding on doors every day.”

Nomura said his duties include meeting with shipping clients, arranging receptions and itineraries for city trade delegations and tracking trends in cargo movements. He said he has focused his efforts on increasing container shipments that pass through the port on their way to Chicago and other inland markets.

Japanese business customs, changes in currency rates and the high cost of living in Tokyo have all driven up costs, said Nomura, who was hired in 1984 and is the port’s only full-time trade representative overseas.

“Here everything is very expensive,” he said. A nice dinner costs a minimum of $80 to $100 per person, he said, and occasionally he spends $200 a person for a business-related meal, including wine.

Arikawa said his research into the cost of Japanese meals indicated that spending $150 to $200 per person was excessive. “You can go over there and get a quite comfortable meal” for far less, he said.

A spokeswoman for the Japan National Tourist Organization in Los Angeles said full dinners at good Tokyo restaurants range from about $80 for sushi to as much as $350 for Western-style steak. “It really depends on the restaurant (and) location,” said spokeswoman Chitomi Stevenson.

Despite Tokyo’s high costs, city auditors have said Nomura’s expenses often appear unnecessary or excessive.

Arikawa, who vacations in Japan and knows many business people there, audited Nomura’s expense statements in 1989 and 1990. Records show the auditor challenged many charges, including club memberships, dinners, repeated entertainment of Japanese news media, as well as hundreds of dollars for “obituary payments” and funeral flowers for families of executives who had no clear business connection with the port.

Arikawa said his research showed such payments were not essential and were not a widespread practice. “He many times will respond (that the expenses are) the custom,” Arikawa said. “But it may be the custom of very large Japanese corporations, not what is typical of (government).”

Green, of the city controller’s office, also has challenged many of Nomura’s expenses, including $220 for an office tea set, $400 for limousine services and a 50% pay raise in 1989 for Nomura’s secretary, whose current salary is the equivalent of $37,000 a year, records show.

Thousands of dollars in charges for magazines and newspapers also seemed excessive, Green said. “How can one person read so many subscriptions?” he said.

Nomura said he is trying to hold down costs and that all of the questioned costs were legitimate and useful. Nomura said he entertains at private social clubs because they are less expensive than first-class restaurants and “the atmosphere is nice.” Several of the clubs, he said, are shipping-related professional associations that help him stay in touch with the industry.

He said the limousine services he hires use sedans, though city auditors say they are still more than twice the cost of a taxi in Japan.

Nomura said he had to sharply increase pay for a secretary because the market for bilingual office help is very competitive in Tokyo. He said subscriptions keep him abreast of industry developments.

Overall, he said, Los Angeles is getting a bargain, compared to some other ports, such as New York.

The Port Authority of New York and New Jersey spends $1.1 million a year on a seven-person Tokyo office, a spokesman said. But the office has broad duties, including promoting tourism and air cargo for all New York area airports, seeking investors for regional economic development projects such as office complexes and industrial parks, and recruiting tenants for the city’s World Trade Center.

New York’s top trade employee in Tokyo is paid about 40% less than Nomura, although Nomura notes that, unlike New York’s representatives, he does not receive retirement and other benefits.

City auditors say they had little success in trimming Nomura’s spending. Green recently obtained a $900 reimbursement from port Commissioner Jun Mori for three days of limousine services that Nomura had charged to the city. The auditor said the charges appeared excessive and Mori, an attorney who represents Japanese business clients, did not appear to be traveling on city business at the time.

Mori was in Japan this week and could not be reached for comment.

Nomura confirmed that Mori had been traveling on private business when the limousine was supplied. But he said Mori helped out with delicate negotiations on construction of a huge coal-loading facility in the port. “He sacrificed his time to come with me,” Nomura said.

In 1989, records show, Nomura complained to Mori after Arikawa raised questions that held up his expense payments. Nomura said he turned to Mori because Mori knows Japan and they had known each other for several years.

A few months after Nomura’s complaint, Arikawa was notified by his supervisor that he would no longer be reviewing Nomura’s expense statements.

The supervisor, port Treasurer Bill Gonzales, said there was no pressure to reassign Arikawa for challenging Nomura’s spending. “A lot of inferences can be drawn,” Gonzales said. “But it’s really not the case.”

Gonzales said the auditing work was reassigned as part of an effort to simplify review of Nomura’s expense statements, which are now checked by the port’s marketing department and the city controller’s office.

In the past two years, the port commission has approved a series of changes in Nomura’s contract which now permit him to bill for many items that auditors had disputed. He is allowed, for example, to charge the port for club memberships, subscriptions and the $4,100 annual cost of commuting from home to work.

“I was hoping they would cut back,” said Green, of the city controller’s office. “Instead . . . they added it all in. They kind of tied my hands on stuff we were trying to get them to (trim).”

Green said he continues to challenge other expenses he considers exorbitant. He is withholding a $727 payment for limousine service and reimbursement for a dinner party that was in excess of $200 a person.