Commissioners allowing DWP nonprofits to audit themselves

Two weeks after demanding details on how two nonprofits run by the Los Angeles Department of Water and Power and its biggest union spent more than $40 million, the agency’s commissioners changed tack Wednesday and agreed to let the groups audit themselves.

The five members of the panel, four of whom were recently appointed by Mayor Eric Garcetti, voted to give the groups, formed about a decade ago to help improve labor relations, a month to account for the expenditure of ratepayer funds. The commission also agreed to permit a CPA firm hired by the nonprofits to conduct the audit, rather than the city’s elected controller.

The two nonprofits, the Joint Safety Institute and the Joint Training Institute, came under scrutiny last month after The Times reported DWP officials claimed they had only scant information on the organizations’ spending.

“This is ratepayer money, and we expect a detailed and public accounting of all expenditures,” mayoral spokesman Jeff Millman said after the vote. “This is a good first step, but if this audit doesn’t cut it, we will exercise all legal options to force disclosure and accountability.”

Millman did not explain why Garcetti’s appointees chose to wait for answers and let the nonprofits select the auditors.

Garcetti and other elected officials, including Controller Ron Galperin, have been demanding detailed records on millions spent on salaries, travel and administrative expenses since The Times report on the nonprofits in September. But so far the groups, whose governing body is jointly led by DWP General Manager Ron Nichols and electrical workers’ union boss Brian D’Arcy, have not produced a detailed accounting.

On Wednesday evening, Galperin said an audit conducted by the nonprofits’ own accountants “simply won’t pass the smell test.” It also would violate generally accepted accounting standards, “where even the appearance of a lack of independence compromises the independence of an audit,” he said.

Garcetti was elected in May after promising to rein in high salaries and benefits at the city-owned utility. D’Arcy’s International Brotherhood of Electrical Workers, Local 18 spent more than $1 million in support of Garcetti’s opponent.

The institutes were created in the late 1990s to “identify” safety and training as core values and to promote “communication, mutual trust and respect” between DWP managers and the electrical workers union. They receive up to $4 million per year in ratepayer funds.

DWP Commissioner Jill Banks Barad said during Wednesday’s meeting: “What I would like to know, and I think the public would like to know, is what exactly do these trusts do?”

After the meeting, Nichols responded in an interview. “They do identification of training needs and make recommendations of training needs.”

But most of the actual training at the department is done by DWP staff, he said, not the institutes.

jack.dolan@latimes.com