Critics Question Hiring of Lobbyist : Ethics: City attorney is reviewing documents relating to employment of Webster Hubbell last year. He was a fraud probe target at the time.

The city of Los Angeles’ hiring of Webster L. Hubbell as a lobbyist drew fire on both coasts Thursday from critics who questioned the propriety of employing the former Clinton Administration official when he was under investigation for fraud.

The comments came in response to a Times article reporting that Hubbell was hired last year to lobby the Administration regarding an airline revenue controversy during the period when he was facing accusations of bilking his former law partners and clients of more than $480,000.

“Obviously, I’m concerned that Mr. Hubbell was hired during this time period,” Los Angeles City Atty. James K. Hahn said in an interview. Three months after the city hired Hubbell, he pleaded guilty to federal mail fraud and income tax-evasion charges.

Federal officials announced early this year that, despite federal law prohibiting the transfer of airport-generated revenue for general purposes, they would not block Mayor Richard Riordan’s proposal to shift $58 million from an airport account to the city treasury.

Hahn said Thursday that he has ordered his staff to collect and review all documents related to the city Airport Commission’s hiring of Hubbell, the former No. 3 official at the Justice Department. Hubbell was retained in September, 1994, at the direction of city Airport Commission President Theodore O. Stein Jr., who also is on Riordan’s staff as a senior policy adviser.

“I don’t know why it was necessary to hire Mr. Hubbell in the first place,” Hahn said, noting that the city had retained the law firm of Morrison & Foerster to handle the matter. “I think the whole affair raises a lot of questions.”

After conferring Thursday morning with a representative of the city controller’s office, Hahn said he was displeased to learn that the hiring of Hubbell was done on the basis of an oral agreement, not a written contract.

Aides to Riordan did not return calls Thursday seeking the mayor’s comment. Riordan was informed of the hiring at the time Hubbell was retained, according to Stein.

Interviews and records obtained by The Times show that the controller’s office withheld city payments to Hubbell until last week because of concerns over the lack of written documentation supporting the arrangement. In addition to having no written contract, Hubbell was not required to keep time sheets accounting for whatever time he devoted to the Los Angeles controversy.

“I think it is better practice to have a contract, in writing, that spells out to a contractor what is expected for the city,” Hahn said.

Stein told The Times that Hubbell was hired lawfully, within the discretion of the Department of Airports. Stein said he terminated Hubbell’s $8,250-a-month retainer last December, when the former associate attorney general pleaded guilty to the felony charges. Hubbell is receiving payments from the city totaling $24,750.

In Washington, a representative of the political reform group Common Cause said Hubbell’s lobbying of the Clinton Administration clashes with the intent of the President’s expanded ethical standard, aimed at revolving-door practices. The standard forbids high-level Administration appointees from lobbying their own agency or department for at least one year after leaving office.

“The spirit of the standard was to avoid the appearance that former high-level officials are profiting on their contacts within the Administration, or trading on their knowledge of the Administration,” said Common Cause Executive Vice President Donald J. Simon. “I think that’s a concern in this case, particularly because Hubbell was perceived as such a close friend of the President” and First Lady Hillary Rodham Clinton was Hubbell’s former law partner.

According to a letter Hubbell sent to the city March 7, he contacted federal officials within the Transportation Department and other, unspecified “members of the Administration.”

The city Airport Department’s executive director, John Driscoll, said in a July 28 letter to the controller’s office that Hubbell was retained because he “knew the bureaucracy, and had access to the decision makers.”

The hiring also was questioned by a spokesman for the Air Transport Assn., a Washington-based group that represents 21 U.S. airlines that are at odds with Riordan over the use of airport-generated revenue.

“This confirms what the [airline] industry suspected all along--that Department of Transportation decisions have been politically motivated rather than based on the law,” said the group’s spokesman, Chris Chiames.

Citing federal law that prohibits the diverting of airport revenue for general municipal purposes, the airline group had unsuccessfully urged the Clinton Administration to stop Los Angeles from shifting $58 million of airport-related revenue to the city’s treasury.

After 11 months of review, a presidential appointee of the Federal Aviation Administration announced in February that officials would not seek to block the city’s proposed shift of the $58 million.

Bill Schulz, a spokesman for Transportation Secretary Federico Pena, said the decision “was made on the merits,” not because of political influence.