The leaders of a pair of trusts that receive yearly payments from the Department of Water and Power have stood in the way of an audit into whether more than $40 million given to the nonprofits over the past dozen years were properly spent, city Controller Ron Galperin’s office said Thursday.

The DWP’s annual $4 million payment to the Joint Training Institute and the Joint Safety Institute was put on hold for 120 days, starting in early December, while Galperin conducts his audit and interviews trust officials, and if any illegal activity is spotted in the records or if the trusts refuse to produce the documents, the $4 million payment could be withheld, under an agreement struck last year.

But the people controlling the two trusts “have prevented auditors from completing the audit” since December, not long after the audit began, and the two sides are now engaged in dispute resolution, according to a statement from the Controller’s office.

The trusts are controlled by boards made up of union leaders and city officials.

Lowell Goodman, the controller’s spokesman, told City News Service that if “we’re unable to complete a professional audit, the controller’s office will not release the $4 million to the trusts.”

Another $4 million is due to be released to the nonprofits later this year.

In December, auditors began reviewing financial records kept in trailers in Sun Valley by the trusts, and employees and officials of the trusts were also to be interviewed, the controller’s officials said at the time.

The Los Angeles City Council approved a deal with DWP union chief Brian D’Arcy in November that includes releasing an annual $4 million payment to the two trusts in exchange for access to half a decade of financial records.

D’Arcy, who heads the International Brotherhood of Electrical Workers, Local 18, had refused to allow financial documents from the trusts — formed more than a decade ago to address DWP worker safety and training issues — to be audited by Galperin.

D’Arcy contended that Galperin did not have the legal right to subpoena records from the organizations, which D’Arcy said were independent from the city.

Galperin, in turn, refused to release the DWP’s annual $4 million payment to the trusts. The payments are part of a collective bargaining agreement with the DWP employee union.

City Administrative Officer Miguel Santana, who is also conducting a review of the trusts finances, issued a joint statement with DWP General Manager Marcie Edwards saying his own findings will be released in the next 30 days.

The trusts and the city “are both committed to resuming the work of the fiscal auditors as soon as possible.”

Santana said in November that any improper activity discovered during the review would be sent to District Attorney Jackie Lacey, who also is investigating the two trusts.       Bob Blumenfield, one of the council members who helped broker the agreement, expressed disappointment at the latest development.

“There was a deal that was struck, and I expect there should be transparency and accountability … ” he said. “That was my expectation and the expectation of the City Council when we put forward the compromise.”

— City News Service

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