Federal Auditors Criticize Contractor

Federal auditors have concluded in a draft report that Cordoba Corp., a politically prominent Los Angeles contractor vying to help supervise subway construction on the Eastside, improperly claimed more than $700,000 in government payments while failing to fulfill a contract it received from the Commerce Department in 1994, the Times has learned.

As part of their report, the auditors cautioned other federal agencies against hiring the firm.

The findings, reported to Cordoba President George Pla by Commerce Department officials Monday, could become an issue in the Metropolitan Transportation Authority’s contentious deliberations over a choice of a contractor to oversee construction of the Red Line extension.

A bid by Metro East Consultants, a consortium that includes Cordoba, is already facing difficulties. MTA Chief Executive Joseph E. Drew has withdrawn his recommendation that Metro East get the $65-million contract because required information was left out of its bid.

The House Commerce Committee is investigating whether the Commerce Department contract was improperly awarded to Cordoba because of the company’s strong political ties to the Democratic Party and the Clinton administration.

In a telephone interview, Pla, a close ally of Los Angeles City Councilman Richard Alatorre and a former Clinton fund-raiser, emphasized that the auditors’ report will not be final until after he has responded formally to the findings. “It’s only a draft,” said Pla, who has 30 days to respond. “I have enormous problems with this report.”

The auditors found that Cordoba, which was chosen by the Commerce Department to run a so-called MEGA center in Los Angeles to help minority businesses, failed to satisfactorily provide services to its clients.

In addition, the auditors said that Cordoba improperly claimed about $716,000 in costs while running the Los Angeles center and received nearly $286,000 in unearned disbursements from the federal government.

The report also said that the center failed to pay more than $263,000 in bills on time and was delinquent in paying more than $483,000 in employee tax withholding to the Internal Revenue Service.

It said that the MEGA center, which was touted by administration officials in 1994 as a central element of Clinton’s effort to provide assistance for the then-beleaguered California economy, has been forced to refund more than $10,000 in fees to dissatisfied minority business owners.

From the beginning, the government’s choice of Cordoba for the more than $3-million contract to operate the center was controversial.

Initially, Cordoba was not chosen for the job by a panel of civil servants designated to select among all of the bids. But Cordoba had some powerful California allies in its successful effort to win the contract.

These included Sen. Dianne Feinstein and Rep. Matthew G. Martinez of Monterey Park, both Democrats, as well as then-Deputy Mayor Al Villalobos--all of whom wrote letters to the Commerce Department asking for favorable consideration of Cordoba.

After the center opened in June 1994, Pla, who had served on Clinton’s finance board in 1992, hired Villalobos, Martinez’s son, Matt, and soon-to-be state Democratic Party Chairman Art Torres to do work for the center. He denied that the three were hired in repayment for their support for the bid.

In its bid to help supervise Red Line construction, Cordoba is part of a group led by the engineering firm of O’Brien-Kreitzberg, which is supported by Alatorre.