Conflict of Interest Ruling Blocks DWP Board’s Vote

The Los Angeles city attorney has disqualified the entire Department of Water and Power board from acting on a $22.9-million contract because one of the board members owns a public relations company with indirect financial ties to the contractor.

As a result of board member Annie Cho’s conflict of interest, the contract extension for MWH Americas Inc. was transferred to the City Council’s Board of Referred Powers.

That council panel voted Thursday to extend an $8-million contract with the firm for six years, at a cost of $22.9 million, for technical assistance in preventing and repairing environmental damage in Inyo County caused by the DWP’s diversion of water from the area.

Councilwoman Cindy Miscikowski, chairwoman of the council panel, voted to approve the contract extension despite concern about the cost, saying she thought the city should develop less expensive in-house expertise to handle such matters.

The rare disqualification of the DWP board comes as county and federal grand juries have launched investigations into contracting at City Hall. The U.S. attorney issued a subpoena on Feb. 2 for the records of all DWP contracts worth $100,000 or more and issued since January 2000, which includes the MWH contract.

In a Jan. 30 letter, Cho sought advice from City Atty. Rocky Delgadillo about whether she faced a conflict of interest in voting on the contract extension.

Cho is the sole owner of a public relations company called Jin Woo Communications Group, which is a subcontractor to Harris Co., another public relations firm, for work unrelated to the DWP. The Harris Co. is a subcontractor to the MWH firm on the Department of Water and Power contract, according to Delgadillo.

He said in a letter that Cho had a disqualifying conflict of interest “because your firm will receive compensation from Harris with respect to your separate unrelated subcontract with Harris, and Harris will receive compensation” from MWH as a result of its contract with the DWP.

Delgadillo went on to rule that the entire DWP board was also disqualified.

The city attorney cited court rulings on state law and reached the following conclusion: “If an officer is interested in a contract, it is unlawful for that contract to be made by a body of which the officer is a member, even if the officer does not participate in any way in the proceeding.”

Cho did not return calls for comment, but Bob Stern of the Center for Governmental Studies said “she should be commended” for having sought legal advice.