CORRUPTION WATCH-At a time where rates are increasing and the availability of water is decreasing the ratepayers of The Los Angeles Department of Water and Power (DWP) are being forced to contribute to a nonprofit union organization that supposedly is working on safety issues on behalf of their workers. The issue has become contentious because the union, International Brotherhood of Electrical Workers (IBEW) has refused to explain how the funds taken from the ratepayers are actually being used.
At a time when water is scarce and the primary goal of a utility, such as DWP, should be securing additional water and finding ways to effectively utilize the existing supply that exists already. Instead they are busy contributing funds that they do not know the use of. The funds have been turned over for the last 10 years to the IBEW under the guise that they are providing training for safety. DWP has a full training course for safety of its workers and the union has additional training courses for the safety of its workers. Why should the ratepayers be forced to pay additional charges that are being kept secret from the public who pays?
As a CPA I know that all nonprofit organizations must file annual returns with the Internal Revenue Service describing the benefits to the public and the use of the funds that have been received from the public. The most recent report by the IBEW regarding this nonprofit organization indicates that approximate 44% of the funds utilized were for administrative purposes such as salaries of executives. That comes out to $1.7 million dollars for 8 employees. The same organization has refused to allow the City of Los Angeles to examine its books despite the fact that the ratepayers within the City of Los Angeles are the ones funding this nonprofit organization.
The IBEW points out the fact that they have had their books audited by an outside accountant. If they are so sure there is nothing wrong why would a nonprofit want to restrict the primary contributor to that nonprofit from knowing the details of its operations? While it is commendable that nonprofits should have an outside audit we should also remember that Bernie Madoff and WorldCom also had outside auditors. This did not guarantee the integrity of the numbers.
The percentage of overhead that is incurred is an indication that only a limited amount of these funds could have been used for their intended purposes. The City Council has taken little action in attempting to protect the interests of the ratepayers of the city-owned utility. Perhaps this reluctance is due to the fact that the IBEW is a major contributor to many members of the Los Angeles City Council.
Over the past 10 years more than $40 million have been given to this nonprofit organization that was paid for by the ratepayers for electrical and water utilities in the City of Los Angeles. How has this nonprofit benefited those ratepayers? There is no evidence whatsoever to suggest that any of the ratepayers have benefited by the existence of this nonprofit and the substantial funding it has received over the past 10 years.
The Los Angeles City Attorney has now asked for more information regarding the use of the funds that have been taken from ratepayers. Since this is a monopoly utility, those it serves have no choice but to accept the rates that are given to them and approved by the Los Angeles City Council. The inclusion of frivolous expenditures for the benefit of contributors and supporters of elected officials should not be part of the rates paid. DWP rates are already higher than the rest of Los Angeles County.
How many other little cozy inside deals have been cut by the City Council that require payment by the average citizen to contributors and supporters. This is only the tip of the iceberg. This is the other side of the corporate purchase of elected officials.
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While both sides are looking out for their own best interest, the citizen suffers with higher rates that will continue to climb as water resources that are sold by DWP decline. These funds could have been put to better use in water conservation solutions and with finding better ways to use non-drinkable water.
The expansion of the population with the decrease of natural resources to serve that population can only lead to future conflict and higher prices for the general public.
For other Clinton Galloway articles, go to search.
(Clinton Galloway is the author of the fascinating book “Anatomy of a Hustle: Cable Comes to South Central LA”. This is another installment in an ongoing CityWatch series on power, influence and corruption in government … Corruption Watch. Galloway is a CityWatch contributor and can be reached here. Mr. Galloway’s views are his own.)
-cw
CityWatch
Vol 12 Issue 661
Pub: Jul 28, 2014