Key Riordan Aide’s Firing Demanded

A long-percolating power struggle at Los Angeles City Hall exploded Friday as City Atty. James K. Hahn demanded that Mayor Richard J. Riordan fire a top aide for leaking confidential legal documents.

Hahn disclosed memos Friday showing that Riordan’s chief operating officer, Michael F. Keeley, violated a city attorney’s office order last fall not to share a memo on litigation strategy with attorneys representing the city’s opponents in a contract dispute concerning the Department of Water and Power. Hahn contends the breach could cost taxpayers $25,000 a week by prolonging the litigation, which itself has a potential price tag of $100 million.

“It’s an outrageous act of betrayal. Here’s somebody that we thought we could trust. . . . Now I have someone who I think is a loose cannon on the deck of the ship of state here in L.A.,” Hahn said, vowing not to share any confidential documents with the mayor’s office until Keeley resigns. “It’s not only wrong, it’s dangerous.”

According to documents the city attorney’s office obtained Tuesday during litigation discovery, Keeley admitted in a faxed note accompanying the confidential memo that he was breaking ranks with the city’s official legal counsel.

“The city attorney did not want me to share these materials with you,” he wrote, “so if you choose to respond I’d prefer that you structure your response without a direct reference to the attached . . . “

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Riordan and Keeley, both attorneys by trade, have feuded with Hahn for years, attempting to whittle down his office’s power by contracting out legal services with private firms. Now Hahn, a longtime political figure in Los Angeles, faces what will probably be his toughest election ever next year with a challenge from Ted Stein, who sat in the top echelon of Riordan’s administration until resigning in January to launch his campaign.

Keeley, 42, declined to comment on the situation and disappeared from City Hall before noon Friday, which would normally have been his big day in the spotlight as the mayor unveiled his proposed budget, Keeley’s No. 1 project. Riordan asked his chief of staff, Robin Kramer, to investigate the situation, and said Hahn’s public release Friday morning of the documents implicating Keeley was “a cheap trick.”

“I’ve known and worked with Mike for 15 years. He is a person of the highest integrity . . . and the most competent human being I’ve ever come across,” Riordan said, adding that he takes the allegations seriously. “I am disappointed at the way this was brought to the attention of myself and others by the city attorney. . . . This is not the way to run city government. If there are problems, if there are mistakes, Mr. Hahn should have the maturity and the integrity to come to me and discuss it with me.”

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But Hahn’s disclosure set off a political bomb at City Hall that far overshadowed any fanfare over the release of Riordan’s budget. City Council members who have long resented what they see as Keeley’s fast-talking arrogance called for his immediate suspension and an independent investigation, quickly taking sides in the escalating battle between Riordan--and inevitably, Stein--and Hahn.

“It’s an earthquake,” Councilman Nate Holden said. “The credibility of the operations of city government have been threatened.”

But Councilman Rudy Svorinich Jr. urged his colleagues to avoid a rush to judgment: “This is Los Angeles of 1996. This is not Salem of 1696.”

Councilman Mike Feuer called a special meeting of the Rules and Elections Committee to deal with the matter Monday. Hahn also said Friday that he will investigate whether there have been leaks in any other case Keeley was involved in, and vowed to forward all information to the State Bar of California.

“At best, this is a very serious lack of judgment that calls into question our ability as council members to implicitly trust that confidential matters be kept within the city family by the mayor’s office,” said Feuer, who is also a lawyer.

Keeley, a law partner of Riordan’s for 12 years, came to City Hall as a deputy mayor upon Riordan’s election and now serves as his top financial officer. The Hollywood resident is legendary throughout City Hall as a brilliant workaholic who is a skilled deal maker with the business community but often lacks political savvy.

Government officials frequently criticize him as arrogant and accuse him of trying to take over projects.

“Keeley’s got such an . . . ego that he . . . loses sight that he represents the mayor,” said Councilman Richard Alatorre, who is Riordan’s strongest ally on the council but is known to have a stormy relationship with the aide.

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The memo concerns a 1991 contract bidding war over the development of geothermal land resources and the sale of steam energy produced there. One of the losing bidders sued the city in January, saying the contract has been amended so much it should be rebid.

Further complicating the situation is the fact that Morrison and Foerster, the law firm representing the company suing the city, also represents the city on a separate matter involving the airport, and has collected about $4 million in fees in recent years.

The ethical questions concern a seven-page memorandum marked “privileged and confidential attorney-client communication” that was sent to Keeley and three council members Aug. 28. According to a Sept. 11 memo to Keeley from Deputy City Atty. Stanton J. Snyder, Keeley wanted to give the memo to Morrison and Foerster but Snyder “repeatedly indicated that you should not release the memorandum because it will educate the opposition and eliminate any tactical advantages.”

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Keeley sent it anyway, perhaps even before asking Snyder. Snyder’s letter says Keeley called at 4:10 p.m. to ask about handing over the document; Keeley’s fax to Morrison and Foerster is stamped 3:55 p.m.

“I find this memo to be well reasoned and persuasive,” Keeley wrote in his cover note on the mayor’s fax transmission stationery, suggesting the lawyer use Keeley’s home fax machine to communicate. “I will be studying these materials over the weekend and would prefer to receive your analysis over the weekend.”

His actions left many council members shaking their heads.

“It’s hard for me to imagine what was going through his head,” Councilwoman Ruth Galanter said.