State Agency Looks Into L.A. Leasing Practices

State officials are looking into whether aides to Los Angeles Mayor James K. Hahn improperly interfered in negotiations for a lease at the city’s port to curry favor with a potential airport contractor.

A top aide to Hahn acknowledged that officials intervened on behalf of one shipping company seeking more space at the port, but said they did nothing wrong.

The state has an interest in harbor leases because the Port of Los Angeles is located on land provided to the city by the state. Conditions of the land transfer require the city to seek the best return possible on harbor leases, said Curtis L. Fossum, senior counsel for the California State Lands Commission.

Fossum said the state inquiry is aimed at making sure the port is not shortchanged to benefit another city department, the airport agency.

“We are interested in reviewing this deal to make sure there is no conflict of interest,” Fossum said.

Attorneys for the state agency have requested that the Los Angeles harbor and airport departments provide all written communications, e-mail and contract documents involving negotiations with Evergreen Marine Corp. and EVA Airways. Both companies were founded by Taiwanese businessman Young-Fa Chang and are operated under the holding company Evergreen Group.

EVA Airways had signed a tentative agreement with Hahn in 2002 to move some cargo operations to the city-owned Ontario International Airport. Deputy Mayor Doane Liu said the airline at the time also expressed an interest in expanding Evergreen’s port operations.

Evergreen is among at least three firms that have been competing for new space at the harbor. The city is looking for a tenant for 84 acres on Terminal Island at Berths 206 to 209.

The Harbor Commission last year considered a recommendation by two of its members to give the shipping firm P&O; Nedlloyd a month-to-month lease.

Liu said an aide to Hahn intervened to stop the Nedlloyd award from moving forward, because the mayor’s office wanted to “build a long-term relationship” with EVA and Evergreen.

“We were doing what businesses do all the time,” Liu said.

In the end, the Harbor Commission dropped the proposal to give the lease to P&O; Nedlloyd and decided to seek new bids.

The deputy mayor said that the city had broken no rules and noted that no lease had been awarded. He said officials were pursuing the city’s best interests at both the airport and the harbor.

Port officials said they were processing the state’s request for documents but had no other comment.

The Los Angeles Ethics Commission has submitted its own request to the Harbor Department for all documents involved in the 2002 award of a lease to Evergreen for use of other berths at the port. The commission also sought information on port contracts and leases involving Trans Pacific Corp., Marine Terminals Corp., San Pedro Forklift and Maersk Corp.

Federal and local grand juries have also subpoenaed documents involving city leases and contracts at the port, airport and water and power departments. The Los Angeles County district attorney is also looking into the role that former harbor and airport Commissioner Leland Wong played in business decisions at the two agencies.

In 2001, while serving on the city Airport Commission, Wong was hired as a consultant by Evergreen Marine. That same year, Wong and the rest of the commission voted to require companies to submit their qualifications to bid on developing an international air cargo facility at Ontario. Although EVA was not mentioned in that 2001 action, that is the facility to which the Taiwan-based airline has tentatively agree to move.

The district attorney’s office served search warrants last week seeking documents involving Wong, according to sources.

Neither Wong nor his attorney returned calls for comment on his actions as a city commissioner and the search warrants.