$300,000 FAREWELL FOR EIDC CHIEF.

Byline: Harrison Sheppard Staff Writer

Cody Cluff, the embattled president of the Entertainment Industry Development Corp., has resigned under pressure and will get a severance package worth almost $300,000, officials said Monday.

Cluff headed the quasi-public agency from its founding in 1995 until he was forced to take a leave of absence as controversy swirled around him and the EIDC because of a District Attorney's Office investigation into possible misuse of public funds. At question is about $500,000 in Cluff's personal expenses and tens of thousands of dollars in campaign contributions to city and county officials who sit on the EIDC's board.

After weeks of negotiation, a deal was cut to offer Cluff six months' salary plus benefits, worth at least $90,000, and reimbursement for legal fees of up to $200,000.

Cluff and the EIDC agreed not to sue each other, and he will help EIDC officials with their responses to the District Attorney's Office probe and their planned restructuring of the agency.

``He finally came around to the point of view that the agency was more important than he was,'' said county Supervisor Zev Yaroslavsky, a member of the agency's executive board.

``He served the agency well by agreeing to this because he has put the interests of the EIDC and the filming industry ahead of his own. It took him a while to get to this point.''

EIDC officials said the deal was in line with standard severance packages that grant a month of pay for every year of employment, and that it was less money than he initially sought. They also said the deal allowed them to move forward with restructuring the agency and finding a new president.

``He decided that it's the right thing for him and for the EIDC to part ways and move forward,'' said Cluff's attorney, Mark Werksman. ``We achieved a very appropriate and mutually agreeable settlement. That was the right thing to do for both sides.''

The deal ends a one-month standoff during which the board attempted to put Cluff on administrative leave, but he at first refused, and then went on vacation. Cluff signed the deal Saturday, and EIDC board chairman Frank Scherma signed it Monday morning based on the board's authorization a week earlier.

Yaroslavsky said the severance amount was equal to or possibly less than the EIDC might have paid if the agency had tried to fire him, because the full board meets so infrequently that it would have had to pay him for months before making the decision.

EIDC officials noted that their bylaws, as well as state law, require them to pay the legal bills of employees for actions relating to their official duties.

Cluff was hired when the EIDC was formed seven years ago out of city and county agencies as a way to streamline the permitting process for production companies throughout the county. The agency serves as a one-stop shopping center for film companies to get permits from the cities and county, rather than having to deal with multiple government agencies on their own.

The agency's status as a public or private organization is at the heart of the controversy. If it is a private entity, as many of its officials contend, it does not have to follow many of the same restrictions on the public sector, such as making political contributions and certain expenses for employees. If it is public, as the District Attorney's Office believes, it may have violated many of those restrictions.

The agency's board includes the elected officials of Los Angeles city and the five county supervisors, as well as industry representatives.

Among the allegations are that the agency, under Cluff's direction, improperly spent hundreds of thousands of dollars in lavish expenses for Cluff and made improper political contributions, including to EIDC board members.

Most of the elected officials who sit on its board have said they paid little attention to the agency before the investigation and some were not even aware they were on the board.

The agency is temporarily being run by consultant Keith Comrie, retired Los Angeles chief administrative officer, and in-house counsel Donna Wells.

Comrie said while the agency may hire an interim president, the search for a full-time head would likely not take place until the restructuring occurs. An outside consulting firm is auditing the agency and examining ways to restructure it to avoid future problems.

Comrie said obtaining Cluff's cooperation was an important element of the deal because he had a lot of information in his head that was not in his files.

``Part of this whole package is we want to clear the record, we want to know everything that happened, so we can structure something that prevents any problems in the future,'' Comrie said.

For example, he said, Cluff already has helped to legitimately explain certain checks that were made out to cash that might have been more difficult to explain without him.

A spokesman for Mayor James Hahn, one of the executive board members, said the size of the package was reasonable because it allows the organization to move forward rather than face protracted negotiations.

``It's a reasonable settlement that puts this chapter behind us,'' said Deputy Mayor Matt Middlebrook. ``And it will allow the EIDC to move forward with its primary mission, which is to facilitate the needs of the entertainment industry in L.A.''

Cluff already has begun cooperating with the agency. Monday morning he met with auditors for about 90 minutes, to answer some of their questions and to clarify information not in the files. He is expected to continue meeting with them.

The District Attorney's Office is continuing to investigate the agency, but at this point has not made any arrests or filed any charges.

David Demerjian, head of the office's public integrity division, said Monday that there were no new developments, but that his office is continuing to investigate. Cluff's resignation, he said, should have no effect on the investigation.

THE DETAILS

EIDC President Cody Cluff has resigned in exchange for a severance package worth almost $300,000. Here are highlights of the deal:

--Cluff receives six months' severance pay, equal to about $67,000, in a lump sum payable within 10 days. He also gets six months of his allowance for housing and automobile, and health insurance coverage. He also gets to keep his work computer and printer. Including the allowance and benefits, the package is estimated at $90,000.

Cluff's base salary is $134,478, according to EIDC officials, but past news reports have indicated that last year his total compensation package equaled $204,000 in salary, bonuses and benefits. The bonuses are not part of his severance deal.

--Cluff is obligated to cooperate with the EIDC in its investigation of facts and claims relating to his EIDC-related duties, including providing requested documents and cooperating in interviews - unless that interferes with his constitutional right to not incriminate himself.

--The EIDC will pay Cluff's legal expenses, up to $200,000, starting with a $35,000 retainer paid to his attorney within 10 days.

--Cluff and the EIDC agree not to sue each other. There are possible exceptions to this provision, including ``intentional and wrongful material misconduct by Cluff in breach of his fiduciary duties toward EIDC, or conduct which constitutes a crime'' and if there is information that is learned that was not known at the time of the agreement.

- Harrison Sheppard

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THE DETAILS (see text)