Port P.R. Pact Draws Fire

Nine members of the Los Angeles City Council said Wednesday that they want the council to scrutinize a $540,000 consulting deal awarded to former port Executive Director Larry Keller, who resigned under fire and is a witness in a federal investigation of city contracting.

Using words like “absurd” and “embarrassment,” some council members harshly criticized the three-year contract.

And two councilmen said they would introduce motions Friday to review the port commission’s decision to award it, an unusual step that would take 10 votes on the 15-member council.

“The fact that the commission voted with relatively little consideration or public input to award a key witness in the probe a half-million-dollars is the definition of eyebrow-raising,” said Councilman Jack Weiss, who plans to second a motion by Councilman Antonio Villaraigosa.

Councilman Tony Cardenas also plans to introduce a motion.

The criticism came just hours after the port commission voted 4 to 0 with little discussion to approve the contract. Commissioner Thomas Warren defended rehiring Keller. “What we’re asking him to do, he would do very well,” he said.

Under the contract, Keller is to be paid $15,000 a month to perform marketing and public relations work with shippers and other clients. He is to maintain an office in Northern California or the Pacific Northwest and serve a contract area of the Pacific Northwest, Asia and Mexico.

Mayor James K. Hahn, who appointed the port commissioners, has defended the plan to have Keller continue to work for the port. On Wednesday, Doane Liu, deputy mayor in charge of the port, said that the port “needs a serious marketing effort” and was fortunate to be able to keep Keller on the payroll.

The port has a marketing staff of 15 people with an annual budget of $6 million, and a public affairs staff of 18 with an annual budget of $7.4 million. The port’s marketing department has contracts with 14 consultants totaling $2.8 million.

Under his contract, Keller will make more money annually than port Marketing Director Jim MacLellan, who earns $126,658 a year, and Arley Baker, director of public affairs, who earns $140,501 a year.

Keller was awarded the contract against the backdrop of ongoing federal and local investigations into operations at the Port of Los Angeles, the nation’s busiest seaport. Keller was among several port employees subpoenaed last spring to testify in secret before a federal grand jury.

The port commission’s decision sparked an outburst of strongly worded criticism from a broad array of council members.

“They’re acting like the public isn’t watching and that taxpayers don’t care, and they do,” said Villaraigosa, who is challenging Hahn in the March election. “This is an extraordinary move on the part of this administration.”

Councilman Dennis Zine said: “It’s worse than pay to play. It’s pay to rip off the taxpayers.” Councilman Bernard C. Parks, another mayoral candidate, said that the contract requires immediate review.

“I think it’s a joke,” said Councilman Martin Ludlow. “This whole thing has become a considerable embarrassment.”

Councilman Tom LaBonge added: “I think Larry Keller has a tremendous talent, but something like this does need to be looked at. I’m a little surprised that this was handled in this way.”

“They want to look at it, that’s fine,” Liu said. “They should. We think the contract and its merits will be evident to them.”

The council has the power to review the contract and send it back to the port commission to be reconsidered.

Keller resigned his $278,000-a-year job Sept. 17 amid speculation that he was being pressured to quit by commissioners, other city officials and community leaders. A former Maersk Sealand executive who headed the port for seven years, Keller faced growing community opposition over his failure to address air pollution from the increasing number of ships, trains and trucks serving the fast-growing port.

Keller’s contract, made public after the commission’s vote, states that he will be paid $180,000 a year for up to three years. The contract is backdated to Oct. 1, and, after the first year, Keller can decide to renew the contract two more times. The port, however, can terminate the contract only if Keller violates various provisions such as divulging confidential information or violating the port’s conflict-of-interest code.

Baker, the port spokesman, confirmed that Keller holds an exit option on the contract, while the city does not.

“Some of our consultant contracts provide a termination clause for both city and consultant, but others don’t,” Baker wrote in an e-mail. “While it’s not written out in the agreement, at the end of the first year we won’t re-up with him for a second year if we aren’t satisfied.” The contract also gives the port’s executive director permission to increase Keller’s $180,000-a-year payment by up to 10% without the port commission’s approval.

Under the contract, Keller is to “interview, contact and solicit importers, exporters, freight forwarders, manufacturers, processors, steamship lines, shippers and purchasers” and “host corporate executives and steamship line officials.” He is to notify the port of proposed visits of “dignitaries and other persons ... who may be interested in the port.”

Keller also is to “communicate environmental plans and related policies to steamship lines as requested.”

Keller could not be reached for comment Tuesday or Wednesday.

In an interview Sept. 20, three days after he resigned, Keller said, “I really don’t know where the county-federal investigation stands.” He said that he had to testify “because I’d spoken to the investigators previously,” and he added, “They came to see me. I didn’t have to seek them out.”

Keller said during the interview that he wanted to do something in maritime transportation, but made no mention of working for the Port of Los Angeles. “It was my decision to leave,” he insisted. “I was the one who wrote the resignation.”

Times staff writer Jeffrey L. Rabin contributed to this report.