Council Acts on Money Laundering

Attempting to clean up local government, the Los Angeles City Council on Tuesday moved to bar proven money launderers from doing business with the city for up to four years.

The proposal, which will return to the council for a final vote later this month, attempts to add teeth to the city’s ethics ordinance, which provides only for the imposition of fines.

Since it was established by the voters in 1990, the city’s Ethics Commission has found seven political donors guilty of laundering campaign contributions, and they have been assessed fines ranging from $3,300 to $447,500. Yet the two biggest offenders--Evergreen America Corp. and Los Angeles Marathon Inc.--continued to hold contracts with the city or lobby City Hall officials.

“We need to send a message to our citizens that every step of the way this council . . . cares about the quality and integrity of government,” Councilman Mike Feuer, the motion’s sponsor, told his colleagues before the 11-2 vote.

According to the motion passed Tuesday, a future violator of the money-laundering law would be prohibited from registering as a city lobbyist or gaining a city contract or fee waiver for four years. Companies or individuals who admit laundering or take corrective action, such as firing the employees responsible or conducting ethics training, could have the punishment reduced to one year.

Further, the council retains the right to waive the prohibition by a two-thirds vote in cases in which there is an “overriding public policy” concern.

Independent departments such as the airport and harbor departments are not covered by the new rule because the council does not review their contracts.

Los Angeles Marathon Inc. was fined $200,000 after the Ethics Commission found that it was the source of 137 campaign contributions totaling $73,000 from 1989 to 1992. The company continues to handle the city’s marathon, and is requesting an extension of its contract until 2005.

Evergreen, one of the largest shipping companies in the world, was fined nearly half a million dollars by the city and several hundred thousand dollars by a state agency for a vast scheme in 1990 that generated $200,000 in illegal campaign contributions. Former Los Angeles Councilman Arthur K. Snyder, Evergreen’s lobbyist, is awaiting trial on criminal charges connected to the scheme.

Council members Hal Bernson and Nate Holden voted against the motion Tuesday. Bernson said he believes that the Ethics Commission is politicized and biased when handing out punishments.

Holden raised concerns that large companies could pressure the council to waive the prohibition in their cases, while smaller ones would not be able to.