Questions raised over MTA inspector general’s ability to do its job

As it prepares to enter one of the largest construction booms in its history, the Los Angeles County Metropolitan Transportation Authority is operating with an internal watchdog staff that has been cut by more than half since 2000.

The nation’s third-largest transit agency — with an annual budget that has increased more than 50% in a decade — also has allowed the head of the inspector general’s staff to serve for about three years in an acting capacity and as the agency’s chief ethics officer. Previously, those roles were separated to avoid conflicts of interests.

The ethics office provides legal advice to MTA employees, executives and board members, and the inspector general functions as an investigative arm with the power to initiate criminal proceedings, including cases against those same officials.

By qualifying her appointment as “acting,” MTA officials have hamstrung Inspector General Karen Gorman, according to her predecessor. William Waters, who retired as inspector general in 2007, contends that Gorman “has no real independence” because board members can remove her without penalty, unlike someone hired for a defined term.

Recognizing some of these concerns, MTA directors plan to hire a permanent inspector general this year, a move that might bolster the office’s resources and eliminate Gorman’s dual role.

Board members say the inspector they hire will determine whether to increase the unit’s staff, which declined from 42 in 2000 to 17 in 2010 while the agency’s annual budget rose from $2.5 billion to $3.8 billion.

In addition, the MTA stands to collect an estimated $40 billion in the decades ahead from Measure R, the county’s half-cent sales tax that will pay for new roads, light-rail lines, transit buses and the Westside subway extension — all of which will require oversight.

“My goal as board chairman is to get on this thing,” said Don Knabe, who also is a county supervisor. “We may need to staff up at some point, but we have to hire a permanent inspector general. That is the first step.”

In December, board members directed the staff to explore the idea of doing a national search for candidates.

MTA officials say the inspector general’s staff ranks were pruned over the years because the unit became too large for its workload and because periodic budget problems called for agency-wide reductions. In the latest round of belt-tightening, the MTA cut more than 500 positions.

The authority’s administration is largely paid with operating funds, which have decreased because of state budget cuts and drops in revenue from fares and sales taxes resulting from the economic downturn. Officials say that MTA’s increasing capital budgets can’t be used for personnel because they are restricted to construction projects.

Two former inspectors general, Waters and Art Sinai, who set up the watchdog unit in 1994, said some of the cuts were justified but asserted that the reductions have become so deep that they threaten the office’s effectiveness.

The inspector general investigates and audits MTA projects, contracts and programs with the goal of detecting, deterring and preventing fraud, waste and abuse. The unit also supplies the board and managers with independent and objective evaluations of programs, policies and financial controls.

“Look at the MTA. The inspector general is way understaffed,” Waters said. “The benefit of the IG is cost savings for the taxpayer and to provide honest, accurate and independent information to the board. To do that, you need adequate staffing.”

Also concerned about the inspector general is L.A. County Supervisor and MTA board member Mark Ridley-Thomas, who says the office has been on “a back burner” for several years. He has asked the inspector general on occasion to perform watchdog actions that it might not have done otherwise.

These include an audit of the MTA’s expenditures for legal services and monitoring of the Exposition light rail project, the cost of which has risen from $640 million to more than $900 million.

“There is a need to beef up the office because of Measure R. You can’t have that type of money moving without an expanded role for the inspector general,” Ridley-Thomas said. “There is the Crenshaw line, the downtown connector for light rail, the Expo line and the subway. The office is half of what it was.”

Gorman defended the unit, saying she needed different, not necessarily more, people. After an internal review upon taking office, she said she streamlined the unit’s bureaucracy to get more work done, increased communications with the MTA’s board and chief executive, and sought to bring in more specialized investigators, auditors and consulting firms for certain projects.

“If you hire really good people with better productivity and expertise, you can be more effective,” Gorman said. “The numbers that we have at this point are of some concern to me. But all departments are feeling the same crunch and the need to operate lean and mean.”

Gorman pointed out that the number of investigative reports by her office doubled from 23 to 46 in the last two years. Annual statements show that investigators completed 122 investigations, on-site reviews and inquiries in 2010, compared with 132 in 2009. Twelve audits were issued in 2010 and 15 in 2009.

But the workload today does not compare with the first 10 years of the office. From 1994 to 2005, hundreds of investigations and scores of audits probed the agency’s financial controls, contracting procedures and projects, including the controversial subway.

At least 10 criminal cases resulted as well as hundreds of thousands of dollars in fines leveled against government figures by the state’s Fair Political Practices Commission. One of the high-profile court cases involved former L.A. City Councilman Richard Alatorre, who pleaded guilty in 2001 to income tax evasion related to $42,000 in gifts he received from entities seeking to influence MTA and council decisions.

“The question is: Has the workload gone down because there really isn’t as much to do as before or is it because you are not looking in the right places?” said Sinai, who was inspector general from 1994 to 2002. “Corruption and waste don’t really go away.”

As chief ethics officer and acting inspector general, Gorman said the arrangement has not compromised her impartiality, effectiveness or independence.

Other inspector general offices across the country, however, have separated the two roles to avoid complications. Some government agencies have assigned the ethics responsibility to their general counsel’s office.

“It is a potential conflict for the ethics officer to advise MTA officials on ethical matters that she might have to investigate as inspector general,” Knabe said.

dan.weikel@latimes.com