LOS ANGELES Omnicom Group's Fleishman-Hillard here overbilled the Los Angeles Department of Water and Power by $4.2 million from 1998-2003, according to an audit conducted by city controller Laura Chick.
"What my audit found are millions of dollars in bills that boggle the mind and defy common sense," said Chick in a statement. "Fleishman-Hillard treated the ratepayers of Los Angeles like a cash cow, milking them for millions."
Chick's audit of the DWP's contract with Fleishman-Hillard began in April. The audit led to a lawsuit by city attorney Rocky Delgadillo in July.
"Fleishman-Hillard was entrusted to do work on behalf of the people of Los Angeles. They not only broke the public's trust , they broke the time-honored traditions of their industry and their own company," said Chick. "My message to Fleishman-Hillard is short and clear: Give back the $4.2 million you took from the ratepayers of Los Angeles."
Some of Chick's findings include "unsupported, unsubstantiated and questioned labor costs" totaling $1,135,113; "labor costs in noncompliance with contract terms" totaling $1,188,042; and "unallowable overhead labor costs" totaling $488,717.
"We strongly disagree with the vast majority of the controller's report," said Richard Kline, senior partner and president of F-H's Los Angeles office. "Most of the assertions in the document cannot be supported by the facts. The report presents preliminary questions and erroneous assertions to arrive at an inflated overall estimate of questioned costs. We are offering to have this entire dispute with the city immediately submitted to neutral mediation in front of a respected mediator agreed to by the city and Fleishman-Hillard."
Kline added that as legal authorities continue to investigate, the agency would "continue to cooperate with those authorities and we will reimburse the city when the actual amount is determined. Fleishman-Hillard would never condone this type of activity."