Stein Criticizes City’s Handling of Lobbyist Probe

After weeks of taking heat over his 1994 hiring of a lobbyist who later got caught up in the Whitewater scandal, city attorney candidate Ted Stein fired back Tuesday, blasting the city for giving a contract to help investigate the situation to a lawyer who donated money to Stein’s opponent.

But as soon as Stein raised the question of a conflict of interest, the city controller’s office--which is handling the investigation--called the lawyer off the case and started looking for someone else.

“Obviously, [Stein] jumped the gun,” said Deputy Controller Tim Lynch, noting that his office is only hiring a private lawyer because City Atty. James K. Hahn recused himself, and that it has questioned each candidate about whether they are involved in the race. “The irony is, it was all done to keep this from being political.”

So went another day in the hotly contested campaign for a low-profile office unnoticed by many city residents.

Stein, a former president of the Airport Commission, spent all of 1996 fiercely fund-raising for his April 8 challenge to Hahn, and the two met last month in the first political debate of the 1997 election season.

Since then, however, they have spent most days pointing out each other’s connections to Whitewater: Stein hired former Associate Atty. Gen. Webster L. Hubbell, who later pleaded guilty to federal fraud charges, to lobby for Los Angeles International Airport. But the person who recommended Hubbell for the consulting contract, Alan Arkatov, ran one of Hahn’s political campaigns.

The city controller, along with the Whitewater grand jury in Little Rock, Ark., is investigating whether Hubbell actually did the work for which he was paid nearly $25,000.

“Sadly, Mr. Hahn has used the Hubbell matter to divert attention away from the real issue of this campaign--his failed record of the past 12 years,” Stein said at his afternoon news conference alleging Hahn’s conflict in the Hubbell investigation. “Mr. Hahn must be called to testify, under oath, about his involvement in the hiring of Webster Hubbell.”

“This is unbelievable,” Hahn retorted in an interview after the news conference. “Ted Stein--we wouldn’t even be talking about an investigation if it wasn’t for him. This was a total Ted Stein deal from start to finish. Nobody else knew anything about it besides Ted Stein.”

Both men said they thought the investigation would be better handled by someone with no connection to City Hall--Stein said the federal grand jury probe should suffice or a special prosecutor should be appointed; Hahn suggested it be taken up by the Los Angeles County Grand Jury.

Hahn denied being involved in the controller’s selection of lawyer Julia Sylva of Frandzell & Shear for the $25,000 contract, although he said someone from the firm recently told him they could no longer talk to one another because of a potential conflict. Lynch said the controller’s office had received no advice from Hahn or his deputies about whom to hire.

Sylva donated $125 to Hahn’s campaign last June. Three other attorneys from Frandzell & Shear gave the campaign checks for a total of $475, and the firm co-hosted a fund-raiser for Hahn.

Upon learning that Sylva had been dropped from the investigation, Stein’s campaign consultant, Harvey Englander, said the situation still troubles him.

“There’s a major conflict, regardless of whether there’s a contract,” Englander said, noting that Sylva had already done some background research on the case, though she has not been paid anything.

“Ted’s trying to kill the investigation,” Hahn campaign manager Matt Middlebrook fired back. “Or delay it and delay it and delay it until after the April 8 election. It’s absurd.”

Delay, it seems, is inevitable. Lynch said it had taken his office a month to find a firm it believed had no ties to the city attorney’s campaign, and on Tuesday he was short of leads on where to find such independent candidates. The Times reported Sunday that about 500 lawyers have already given money to Hahn or Stein, including about 40 firms that have had contracts with the city.

“We’ll keep looking,” Lynch said.