By David Zahniser, Dakota Smith and Emily Alpert Reyes, LOS ANGELES TIMES
July 23, 2019
Los Angeles Mayor Eric Garcetti on Tuesday sought to reassure the public in the wake of FBI raids at the Department of Water and Power headquarters, announcing that he had pushed out the agency’s top executive months ahead of his planned departure.
Garcetti’s announcement came as activists called for more forceful action at the DWP, which has been reeling from a scandal over the city’s response to a disastrous rollout of customer billing software at the utility.
“It’s very clear to me that, given the events of the last 24 hours, we need to have a utility that people can trust and leadership they can trust,” Garcetti said in an interview.
The mayor announced weeks ago that General Manager David Wright, a key figure in the utility’s effort to address a crisis over its customers’ inaccurate bills, would step down from the DWP on Oct. 1. But in the wake of the FBI searches at the DWP and city attorney’s office on Monday, Garcetti’s deputy chief of staff, Matt Szabo, called Wright on Tuesday morning to tell him “he was no longer needed at DWP,” the mayor said.
Garcetti said he concluded that Wright “needed to step away from the department today, full stop.”
Wright did not respond to a request for comment.
City Atty. Mike Feuer spokesman Rob Wilcox said the federal search warrants were connected to the city’s settlement of a class-action lawsuit filed over the fallout from inaccurate DWP bills sent out starting in 2013. Wilcox said the warrants were also related to a separate lawsuit filed by the DWP and the city against PricewaterhouseCoopers, the global consulting firm that oversaw the launch of the new billing software.
The searches come less than a year after FBI agents searched the home and offices of Councilman Jose Huizar in an investigation that appears to be separate from the DWP probe. In that investigation, FBI agents have been looking at approvals by city officials of hotel and residential towers in downtown Los Angeles.
The DWP commission, a five-member panel appointed by Garcetti, voted Tuesday to appoint DWP Chief Operating Officer Marty Adams as interim general manager, paying him about $400,000 annually. The commission also recommended that the City Council make Adams’ appointment permanent.
Garcetti announced he had picked Adams for the job last month, making him the fourth general manager at the utility since he became mayor in 2013.
A vote to make Adams interim general manager had been scheduled before the FBI raids and, previously, the mayor planned for Wright to stay on at the DWP for several months. On Tuesday, he made clear the timetable had changed for Wright.
“I’m not speaking to anyone’s innocence or guilt. This is about effective leadership,” Garcetti said in an interview. “It seemed clear to me that the cleanest slate we can give our [new] general manager is to make sure he’s the only general manager, past or present, in the building.”
Panorama City Neighborhood Council member Tony Wilkinson, who heads a committee on the DWP, said Garcetti’s decision to force Wright out on Tuesday was about “optics” — an attempt to make it look like the city is “taking appropriate action” in the wake of the FBI raids.
Jamie Court, president of the advocacy group Consumer Watchdog, described Garcetti’s ouster of Wright as an inadequate response to an unfolding crisis at the utility. Ejecting Wright and elevating Adams, a 35-year veteran of the DWP, is “like promoting the Titanic’s engineer,” Court said.
“This is a sign that no one is taking seriously the need for new leadership and a new culture at an agency that was just visited by the FBI,” he said. “This is an attempt by the old guard to keep the same culture in place.”
Wright spent much of the day being deposed by attorneys for PricewaterhouseCoopers in the case filed over the DWP’s billing problems. One lawyer who attended the deposition, who declined to be named because the person was not authorized to discuss the proceeding publicly, said Wright invoked his 5th Amendment right against self-incrimination throughout the questioning.
Anthony Pacheco, a lawyer for Wright, declined to comment about his client’s deposition when contacted by The Times.
Federal investigators have sought information from several locations within the DWP’s offices, including the general manager’s office and the office of the DWP commission, according to an excerpt of a search warrant reviewed by The Times. They are looking for evidence of a wide array of possible crimes, including bribery, kickbacks, extortion, mail fraud and money laundering, according to the warrant.
The search warrant excerpt also showed that investigators have been seeking information about DWP contracts — awarded or proposed — with companies affiliated with Paul Paradis, an attorney retained by Feuer in a lawsuit filed against PricewaterhouseCoopers.
Wright was appointed general manager of the DWP in 2016 and spent part of his tenure trying to improve customer service and deal with the fallout from the troubled billing system. At Wright’s recommendation, the DWP approved a no-bid $30-million contract in 2017 with Aventador, a company owned by Paradis.
Before the DWP commission approved the contract, a high-level manager at the utility warned Wright in a memo that Paradis’ proposed rates for the Aventador agreement would be significantly higher than those of other companies.
At the time, Wright argued that the agreement was needed so the DWP could comply with the terms of the class-action lawsuit settlement with ratepayers.
The DWP also hired Paradis’ son in 2016. The son later took a job with Aventador, working as a senior project associate, according to DWP chief administrative officer Donna Stevener. Aventador billed the DWP $503,000 for one year’s worth of work by Paradis’ son, Stevener told The Times.
Investigators are also seeking information related to the DWP’s activities with the Southern California Public Power Authority, a government agency composed of several municipal utilities, according to the warrant excerpt.
Michael Webster, executive director of the power authority, said his agency hadn’t heard from the FBI and declined further comment.
Garcetti, in an interview, said he does not know what FBI agents were looking for on Monday. He referred questions about the $30-million no-bid contract to the DWP board, saying he never saw it.
David Zahniser covers Los Angeles City Hall for the Los Angeles Times.
Dakota Smith covers Los Angeles Mayor Eric Garcetti and City Hall for the Los Angeles Times.
Emily Alpert Reyes covers City Hall for the Los Angeles Times.