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LAUSD CONTRACTOR IN TROUBLE; BUILDER'S PREDECESSOR LAUNDERED MTA CASH.

Byline: Terri Hardy Daily News Staff Writer

The construction company that oversees Los Angeles schools' $2.4 billion repair project came under attack Wednesday after the state released information that a predecessor of the company laundered campaign contributions to the MTA.

Board of Education members and a citizens panel monitoring Proposition BB expenditures called for an investigation into why O'Brien-Kreitzberg Inc. did not disclose the ongoing state investigation to the Los Angeles Unified School District.

An angry state Sen. Tom Hayden went a step further, urging the district to suspend O'Brien-Kreitzberg's contract.

``The time to amputate is immediately,'' Hayden said. ``If the district doesn't, they're just setting in motion future problems for themselves.''

Alan Krusi, president of O'Brien-Kreitzberg Inc. dismissed Hayden as ``grossly overreacting.''

``There's no misconduct here,'' Krusi said.

Krusi contended that his present company should not be confused with its predecessor, O'Brien-Kreitzberg & Associates Inc., the firm that paid a fine for laundering campaign contributions and which was bought out in 1995.

Although O'Brien-Kreitzberg Inc. used the former company's work history and reputation to capture the LAUSD contract and, Krusi acknowledged, has many of the same employees investigated for laundering funds, it is not the same company, he stressed.

``It may sound like a fine distinction, but it's not,'' he said.

The hair-splitting was lost on Hayden, who fired back: ``It's reshuffling of the same firm. They just can't reorganize their identity and escape their past.''

Superintendent Ruben Zacarias said the district's lawyer will investigate and report to the board in two weeks. The report recommendations could include the possibility of contract suspension, he said.

``We have to look into all the legal implications and deal with these new revelations,'' Zacarias said.

Steve Soboroff, chairman of the BB Blue Ribbon Citizens Oversight Committee, said the panel will conduct its own probe into the advisability of terminating O'Brien-Kreitzberg Inc.'s contract.

``I'm concerned if they were disingenuous or irresponsible when they filled out the forms to get this job,'' Soboroff said.

In 1995, O'Brien-Kreitzberg & Associates Inc. was purchased by the engineering firm of Dames & Moore and changed its name to San Francisco Construction Management Inc. It became a subsidiary of Dames & Moore.

At the same time, a second Dames & Moore subsidiary, O'Brien-Kreitzberg Inc., was created.

In June, the school district hired O'Brien-Kreitzberg Inc. and 3D International to jointly oversee its massive BB repair and construction jobs.

In late June, the LAUSD asked the companies to fill out disclosure forms, but Krusi's company failed to mention the state investigation.

State documents released this week revealed the Fair Political Practices Commission probe into improper contributions to Metropolitan Transportation Authority officials.

``They specifically asked if we were undergoing any civil or antitrust action,'' Krusi said. ``This was an administrative law matter.''

The FPPC investigation found that between 1993 and 1995, 23 employees of the former O'Brien-Kreitzberg & Associates made donations to elected officials - many of them MTA board members. Those employees were then reimbursed by the construction company, a violation of the Political Reform Act, FPPC documents show.

``In most of the instances in which laundering occurred, the contributions were directed to candidates for public office who might become involved in the construction project award process,'' FPPC documents stated.

The company, then a leading contender for Metro Rail projects, was fined $40,000.

Several employees who laundered the contributions are now part of O'Brien-Kreitzberg Inc., Krusi said.

``Those employees were not investigated; it was the company,'' he said.
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Publication:Daily News (Los Angeles, CA)
Geographic Code:1USA
Date:Sep 25, 1997
Words:574
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