Appeals Court Rules Controversial L.A. Water & Power Trusts are Subject to City Audits

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October 22, 2015; Los Angeles Times

The Los Angeles Times reports that an appeals court in California has upheld the right of the City of Los Angeles to inspect the financial records of a controversial pair of Los Angeles Department of Water and Power (DWP) nonprofit trusts.

The trusts, which have received more than $40 million in ratepayer money, are co-administered by the union representing most of the DWP’s employees and managers from the city-owned utility. For the past two years, union leaders have waged a “bitter legal and political battle” to keep the records secret.

While the case was winding its way through the courts, a compromise allowed L.A.’s city controller limited access to five years’ worth of records. The controller’s auditors found that the nonprofits had paid millions of dollars to vendors without competitive bids, overpaid top managers and let them charge hundreds of thousands of dollars on publicly financed credit cards for things such as expensive dinners and travel.

This week, a panel of three judges from the 2nd District Court of Appeals in Los Angeles ruled that the controller has the right to perform annual audits of the nonprofits.—Larry Kaplan