LOS ANGELES - A Los Angeles councilman this week called for fuller disclosure of city relations with lobbyists, partly because of a recent underwriting controversy surrounding a convention center financing.
Lobbying that occurred during the Los Angeles Convention and Exhibition Center Authority's underwriter selection process is "a good shining example of what we were aiming at and concerned about." Greg Nelson, chief of staff for Councilman Joel Wachs, said yesterday.
The councilman's lobbying disclosure proposal would require all city staff and commissioners to keep written public records of contacts with city hall lobbyists.
The current city ordinance requiring lobbyists to report information on compensation received from clients "does not disclose the ~real' behind-the-scenes lobbying which often takes place." Wachs said in a press release.
Wachs said his plan would be implemented by city staffers, not the lobbyists themselves. The staff members and commissioners would have to keep records on contacts "with legislative advocates and legal representatives for those who do business with the city or who are seeking to do business with the city."
A motion to accomplish the disclosure was unveiled Tuesday at a Los Angeles City Council meeting. The proposal has been referred to the Rules and Elections Committee for consideration, Nelson said.
"The relationship between lobbyists and governmental officials has always created a cloud of suspicion over the integrity of our governmental system," the motion says. "One of the reasons that government is viewed with such cynicism is that many people feel that the public has much less influence over governmental decision-making than do the rich and powerful and their lobbyists."
Wachs' motion says the city's adoption of fuller lobbying disclosure would be another step toward "establishing Los Angeles as the model for open, effective, and equitable government by continuing to remove the cloak of secrecy from the decision-making process."
The city's Airport Commission already is moving toward implementing similar lobbying disclosure requirements, Nelson said, and that effort may serve as a model for a citywide plan.
Complaints about lobbing in the municipal bond industry arose this spring as the convention center authority assembled an underwriting team to handle a large refinancing issue.
The authority's members voted in May to appoint Grigsby Brandford & Co. as the bookrunner, with PaineWebber Inc. and Goldman, Sachs & Co. as co-senior managers. By contrast, a nine-member review committee had earlier recommended Goldman as the bookrunner, with Grigsby Brandford and Bank of America as co-senior managers.
Some underwriters complained that lobbyists helped influence the authority's decision, and Bank of America withdrew from the process after expressing "grave concerns about the fairness and objectivity" in a letter to the city administrative officer.
One complaint centered on the fact that underwriters or their lobbyists often can raise various allegations about their competitors' abilities and track records during behind-the-scenes discussions.
But some members of the authority complained about such insinuations, arguing that lobbyists from various firms played no role in swaying their underwriter decision.
The City Council eventually ratified the authority's decision at a meeting a month ago, though some council members expressed concern about the intense efforts made by various lobbyists and consultants during the process.
Nelson observed that such lobbying efforts are hardly limited to the municipal bond industry.
"You see it a whole lot" on other large city contracts, such as those involving rail construction, he said
Nelson stressed that there is nothing wrong with lobbying."in and of itself." Concern arises, he said, when there is an appearance that the lobbying has occurred "on the sly. "
Nelson said other complicated issues arise when attorneys who act as lobbyists exempt themselves from current reporting requirements, claiming attorney-client privilege. "It gets very clouded, " he said, especially when attorneys work in a capacity other than lobbying.
That issue arose during the convention center financing because some underwriters questioned which role former city Councilman Arthur K. Snyder was playing when he appeared at meetings alongside Grigsby Brandford representatives.
Snyder often works on unrelated matters in a registered lobbyist's role.
In a June 1 letter to The Bond Buyer. however, Snyder objected to being identified as a lobbyist in connection with the bond financing.
Snyder said his letters and an appearance on behalf of Grigsby Brandford, "inasmuch as they have been without compensation, do not constitute, under Los Angeles law, lobbying."
At the time, a Grigsby Brandford official said Snyder was involved because he would serve as an underwriter's counsel on the transaction. Snyder's firm, Snyder & Archuletta, served in such a role. as co-counsel, when the $505 million transaction came to market this week.
Other attorneys also sometimes wear different hats depending on the city business at hand, and that is "one of the perplexing issues that we have to deal with," Nelson said.
In a separate development this week, the Los Angeles Ethics Commission and the California Fair Political Practices Commission levied a record $895,000 penalty against a major shipping company in connection with a scheme involving illegal campaign donations. Some of Arthur Snyder's relatives and employees were mentioned in connection to the case, though none were charged with any wrongdoing.
On Tuesday, Evergreen America Corp. "stipulated to violating 236 counts of campaign money laundering to statewide candidates and Los Angeles City Council candidates between 1989 and 1991," the state commission says in a press release.
The contributions, totaling $172,000, "were laundered through Evergreen's agents and employees and through their friends and relatives" at a time "when an Evergreen-related company was planning a land development project in downtown Los Angeles," the release says. The penalty is "the largest political ethics fine in the nation's history," the release says.
There were no allegations that the recipients of the contributions knew the true source of the money.
Thirty of the counts, each involving $500 contributions to City Council candidates and members, reflect evidence that Evergreen funneled contributions through "middlemen," according to documents in the case.
Among those identified in the documents as "primary" middlemen are Arthur Snyder's wife - Delia Wu Snyder - and the controller at his law firm, Chi May Chen.
The documents identify primary middlemen as "persons whom Evergreen directly reimbursed. who in turn either made a direct contribution, or recruited numerous other individuals to make contributions."
The documents also say the stipulation "expressly does not settle any claims the [Los Angeles] commission may have" against Snyder, his relatives, or employees.
The commission's chief of enforcement yesterday said, "I can't comment" on whether any of those individuals are under investigation.
Arthur Snyder's lawyer, Mark Geragos, said that "as far as I can tell" his client is not a target. Geragos said he would know "if there is anything" being raised because of the Evergreen case.