Controller Report Raps Treasurer’s Office, Cites 11 Possible Tamperings

A city controller’s report today found “discrepancies” between the accounts of Mayor Tom Bradley and Far East National Bank Chairman Henry Hwang regarding a pivotal telephone conversation about city deposits with the bank.

In releasing an audit of the city treasurer’s office, Controller Rick Tuttle also criticized the department for numerous management defects and said he found that 11 competitive bid sheets, including one involving Far East, may have been altered through illegal tampering.

Tuttle said “there was a major breakdown in internal control” within the treasurer’s office March 22 this year, the day following Hwang’s telephone call to Bradley, who had been paid $18,000 in 1988 as an adviser to the bank.

Following Hwang’s call to Bradley and the mayor’s conversation with Treasurer Leonard Rittenberg, the treasurer’s office reinstated a $1-million time deposit with Far East that had expired and added another $1 million.

Hwang told investigators in sworn testimony that he called the mayor to ask his help because he had learned that the city was removing a $1-million deposit from Far East. He said he had no recollection of discussing other banks or broader city policy with the mayor.

Bradley testified that Hwang had asked him whether it was true that the city was withdrawing funds from “all banks.” The mayor said he then called Rittenberg because of concerns that the city was in “serious desperate financial straits.”

Bradley and Rittenberg have both said the mayor did not try to pressure the treasurer into making deposits with Far East.

Someone in the treasurer’s office later tried to cover up a notation showing that the mayor had inquired about Far East. A bid sheet was also altered to hide the fact that the $2 million was deposited without competitive bids from other banks in violation of office policy.

Tuttle’s report found that 11 of 53 other time deposits reviewed by his office showed use of correction fluid that “may indicate falsification and tampering of public records,” which is a felony. The other deposits did not involve Far East.

The controller said police have custody of the altered documents and are investigating whether there were criminal violations.

“Our audit of the treasurer’s office has disclosed that the office has major weaknesses that has resulted in violations of their system of internal control on competitive bidding and review procedures,” Tuttle said.

The treasurer’s office has been the subject of at least three major audits or investigations in the past six months--all prompted by the actions of Bradley, Rittenberg and his staff in the days following Hwang’s March 21 telephone call to the mayor. Each of the reports has been strongly critical of operations within the treasurer’s office.

While Bradley was cleared by City Atty. James K. Hahn last week of any criminal wrongdoing involving Far East and other business relationships, Hahn criticized the mayor for lax ethical standards in his outside dealings. Hahn also filed a civil suit against Bradley for failing to publicly disclose, as required by law, six of his business investments.

Also contributing to this article were Times staff writers Frederick M. Muir and Rich Connell.