Port Chief Had Fiscal Ties to Firm

While executive director of the Port of Los Angeles, Larry A. Keller helped woo shipping giant Maersk Sealand to a prime site at the port at the same time he was living in a home partially owned by the firm, port and county records show.

Keller wrote two letters to Maersk in 1998, enclosing detailed responses to the firm’s interest in opening a new hub in the Los Angeles area and inviting officials to discuss a deal. Five weeks later, Keller, a former Maersk executive, recused himself from the negotiations because of his remaining ties to Maersk. Keller, who has been called as a witness before a grand jury investigating city contracting, resigned in September amid criticism from activists and city officials that he was insensitive to growing community concerns about air pollution.

On Tuesday, the Los Angeles City Council took up a separate issue involving Keller, a $540,000, three-year marketing contract that the port commission awarded to him last month.

The City Council voted unanimously to review that decision, the first time in several years that it has intervened in an action by the city’s port commission, which oversees the nation’s largest port.

“This contract ... raises a whole series of questions,” said Councilman Jack Weiss.

“We are talking about an individual who is a key witness in state and federal criminal investigations ... who left just recently under what can charitably be described as a cloud.”

Under Keller’s leadership, the port grew into the nation’s largest seaport. Part of that growth stemmed from the port’s decision to lease Pier 400 to Maersk, which relocated from the Port of Long Beach.

Pier 400 is now the world’s largest container terminal.

Keller worked for Maersk for 20 years before moving to the port in 1996 and becoming its executive director a year later. In a financial disclosure form that Keller filed in 1998, he indicated that the balance remaining on a home loan from Maersk was “over $10,000.” Property records show he bought the home in Long Beach’s Naples neighborhood in 1989.

When Maersk, a Danish firm that is one of the world’s largest shipping companies, began looking for a new terminal in the summer of 1998, Keller himself responded.

In a letter dated Sept. 3, 1998, he wrote to Maersk officials, “I am confident that the Port of Los Angeles and its new Pier 400 terminal will meet your current requirements and long-term goals.” Keller wrote a separate letter the same day to Maersk officials on the East Coast.

In both letters, he suggested that port and Maersk representatives meet Sept. 23 to discuss the proposal.

Port spokeswoman Theresa Adams-Lopez said that certain “inconsistencies” appeared in the two letters, such as the typed misspelling of Keller’s last name under his signature. But she said she was not implying that the letters were not authentic.

“They were signed by Larry Keller, as far as we can tell,” she said.

Five weeks later, Keller distanced himself from the negotiations in an Oct. 13 memo. “Because of some of the remaining elements of my past relationship with the Maersk Line, the City Attorney has advised that it will be necessary that I not be involved in any fashion, either directly or indirectly, in any negotiations with Maersk,” he wrote in the memo.

Asked why Keller initiated negotiations with Maersk, but later recused himself, Adams-Lopez said: “I don’t know if we really have a comment on that, other than that the dates are what they are.”

It was not until 1999 that Keller took full possession of the home he owned with Maersk. A grant deed on file with the county states that the property -- listed as owned by Keller, his wife, Kari Keller, and Maersk -- was transferred to Keller and his wife in January 1999.

The document transfer tax is listed as zero, followed by a handwritten notation that says “gift.” Whether the 1999 transfer was a gift by Maersk is unclear. In a disclosure form Keller filed in 2000, he indicated that Maersk had been replaced by another lender in March 1999.

Port officials said they could not explain why the word “gift” appeared on the deed.

Telephone calls to Keller’s home went unanswered Tuesday. A man answering Keller’s cellphone said Keller was not there and hung up.

Despite Keller’s troubles with the community and his role as a witness in a federal probe, port commissioners on Oct. 13 voted to pay him $15,000 a month over the next three years for marketing work with shippers.

But some City Council members protested the move, suggesting that it was inappropriate to rehire Keller, and questioned why the port, which spends $6 million a year on marketing, needed to spend $180,000 a year more on Keller.

The port commission’s action drew the attention of district attorney’s investigators, who attended the meeting and later requested a transcript.

Port officials and Mayor James K. Hahn have defended the contract, arguing that Keller’s strong relationships with shipping companies make his expertise invaluable.

Port commission President Nick Tonsich added that any suggestion that the port was trying to silence Keller with a consulting contract was “absolutely ludicrous,” given that Keller has already testified.

Weiss and Councilman Antonio Villaraigosa submitted a proposal that called on the council to review the contract.

Their proposal included language that some described as “accusatory,” stating that “awarding such a contract in the midst of a federal criminal investigation is not in the best interests of the city of Los Angeles.”

“It sounds like a court order,” Councilwoman Cindy Miscikowski said Tuesday, as the council considered the proposal. “It sounds like a grand jury. We are not that.”

Instead, Miscikowski and several other council members supported a milder motion from Councilman Tony Cardenas.

Ultimately, council members voted 8 to 5 to incorporate some of Weiss and Villaraigosa’s proposals in Cardenas’ motion.

Among them were requiring the port commission to send the council copies of notes and other documents pertaining to Keller’s contract and ordering the council’s personnel committee to review the matter along with the commerce committee.

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Times staff writers Zeke Minaya and Jeff Rabin contributed to this report.