DWP PAID P.R. FIRM TO SPIN OPINION ON 'GREEN POWER' ISSUE.

Byline: Beth Barrett Staff Writer

DWP officials paid thousands of dollars in 2002 to Fleishman-Hillard for damage control months before Los Angeles City Controller Laura Chick issued an audit accusing the public relations firm's subcontractor of faulty billings, according to city documents and interviews Wednesday.

Chick, who released an audit Tuesday accusing Fleishman-Hillard of overbilling the Department of Water and Power by $4.2 million since 1998, said in an interview that utility officials started paying the firm to help it spin public opinion even though release of the audit of its subcontractor, the Lee Andrews Group, was still five months away.

At least $41,000 - and likely much more - was paid to Fleishman-Hillard in a one-month period to develop strategies to deal with criticism over the $2 million paid to the Lee Andrews Group to promote ``green power'' energy-efficient programs.

Work papers that were part of Chick's latest audit show that Fleishman-Hillard executives pored through the billings by Lee Andrews, which the controller said lacked sufficient backup. And the company's executives also met frequently with top DWP officials and Deputy Mayor Troy Edwards, who resigned earlier this year over ``pay-to-play'' contracting allegations.

``It was absolutely not appropriate,'' Chick said. ``Nothing in their (contract) calls for them to be 'spin doctors' on the department's response when the audit comes out.

``The ratepayers are paying a P.R. firm to assist a public-sector department in its response to a public-sector audit.''

She said the spin efforts appeared to extend to Hahn's office, noting that several billings for meetings or conference calls in the same period included Edwards.

Sources said it was not uncommon for Edwards, who was Hahn's 2001 mayoral campaign fund-raiser, to be included in conversations with the P.R. firm on issues with high media sensitivity.

Edwards, who was put in charge of overseeing the DWP, Airports and Harbor departments, could not be reached for comment.

``The (mayor's) top staff were very, very aware of Fleishman's contracts - what they were and were not doing,'' Chick said.

She said the appearance was that the DWP was paying Fleishman-Hillard to find ways of getting out of complying with the audit.

Officials in the Mayor's Office did not respond to inquiries.

Hahn's communications director, Shannon Murphy, who was a senior account executive at Fleishman-Hillard in April 2002, referred inquiries to another press spokesman.

Yusef K. Robb, Hahn's spokesman, said he couldn't provide details as to whether the mayor knew about the public relation firm's billings relating to the controller's audit. He said Hahn wants all the facts regarding Fleishman-Hillard, and that if there is any wrongdoing, the firm should be penalized.

Richard Kline, senior partner in Fleishman-Hillard's Los Angeles office, confirmed the billings, but said he couldn't immediately provide additional details.

Fleishman-Hillard executives challenged the audit of their firm Tuesday, saying an internal audit showed there was only about $650,000 in time improperly billed to the DWP.

Mark Barnhill, former senior partner at Fleishman-Hillard, who billed the DWP $5,775 in April 2002 for ``public affairs counsel regarding controller's inquiry and ongoing issues,'' said he did not handle the DWP account on a regular basis. He said he was brought in to provide advice on how best to respond to anticipated media inquiries.

``There was no spin-doctoring here,'' Barnhill said. ``The DWP knew it had an audit coming that would be sharply critical and would generate media inquiries.''

The DWP's acting general manager, Enrique Martinez, said he hadn't been involved in the billings, and didn't know why the work was ordered.

David Wiggs, the former general manager, and Frank Salas, the department's former chief administrative officer, have both retired and could not be reached for comment.

Sources described the DWP as scrambling for a way to defuse a potential crisis between Chick, who in March 2002 had refused to pay a $27,000 ``green power'' party tab for 150 people at the Music Center, and DWP Commissioner Kenneth T. Lombard, a Hahn appointee who had championed the program.

The party was widely regarded as a fiasco. Green-power supporters were worried that Chick would use it as an excuse to try to disband the entire program, which could have jeopardized the Lee Andrews' contract as well.

Lombard, who has since moved to the Pacific Northwest, said in an interview that while he had a ``difference of opinion'' with Chick, it never escalated and that he respected her work.

Lombard said he was committed to increasing the participation of minority firms, like the Lee Andrews Group, at the DWP, but never intervened with any specific vendor doing business with the department.

``Any time there was a minority firm, I would encourage the staff to take a strong look,'' Lombard said, adding that that still meant the firms had to compete fairly on pricing and other issues.

Officials with Lee Andrews did not return calls.

Chick said the DWP's use of Fleishman-Hillard five months before the audit was released was ``spin-doctoring at its best.''

``They had no idea what the audit would show before the audit came out. It was so far in advance, I didn't know the finding of the audit. They used me as a new cash cow.''

Chick said she and Lombard didn't agree on the green-power program, and that tension escalated after Lombard signed a letter that was critical of her. She said the letter was circulated after Fleishman-Hillard had begun working on the audit response.

``The idea that a multinational P.R. firm would be brought in by DWP to deal with the fact a commissioner and the controller have differences is totally inappropriate,'' Chick said.

``The Mayor's Office should have had (us) come together ... If there were any bad feelings between a commissioner and me, the best way to solve that would have been between the commissioner and me.''

Fleishman-Hillard had a $3 million-a-year contract with the DWP and at the time also technically oversaw the Lee Andrews contract by processing its invoicing and billing. After the 2002 audit, the Lee Andrews contract was no longer under Fleishman-Hillard.

Beth Barrett, [phone]

beth.barrett(at)dailynews.com