LOS ANGELES—Fleishman-Hillard has placed the former general manager of its Los Angeles office on indefinite paid leave following reports that employees in that office were encouraged to inflate bills to the Los Angeles Department of Water & Power.
The announcement came a day after City Attorney Rocky Delgadillo said Thursday that he would sue Fleishman for allegedly defrauding the city. Delgadillo was apparently responding the reports in the Los Angeles Times, which included charges by former FH employees that they were told to pad timesheets with inflated hours.
Fleishman, meanwhile, says it is continuing its own internal investigation into the matter. “These allegations about past events in our Los Angeles office are very disturbing, if true,” said Richard Kline, who took over as head of the office on an interim basis in April. “We are not discounting any information as we continue our investigations.”
The catalyst for the latest developments was an investigation by the L.A. Times which quoted several former employees who said they had been directed to submit falsified timesheets for the work on the DWP account, which was worth $3 million a year to Fleishman.
“It was wrong, unethical and done on a regular basis,” said Diana Greenwood, who worked for FH for a year from 1998 to 1999. “The attitude that was handed down to us was that you get as much as you can because these accounts may dry up tomorrow. There was a monthly billing figure that we needed to hit, so if it meant making up stuff, we made up stuff.”
Greenwood estimated that about 20 percent of the hours she reported for the utility were made up.
The next day, another former Fleishman employee, Keith Pillow, told the paper he was ordered to bill 10 hours a day, rather than the customary eight, at a time when high-tech firms were cutting their PR budgets. Pillow worked for the firm for about a year before being laid off in 2001.
Kline says the firm’s own records contradicted Pillow’s claim. “In the entire time he was with the firm, he billed 10 hours a day on 13 days. His average billable time was 6.5 hours per day… In August 2001, he averaged 4.4 billable hours a day.”
At least six other former employees spoke to the Times, all on condition of anonymity. Two of them reportedly claimed Dowie was aware of or encouraged the inflated billings. Said one, “There was intense pressure to make sure no money was left on the table, so to speak, from the $3-million-a-year contract. Doug made it clear that Fleishman-Hillard’s corporate headquarters counted on collecting every penny every month that was provided for under the DWP contract.
“The pressure we felt to make our numbers resulted in Doug routinely walking the halls, asking that employees make up hours, especially at that time each month when St. Louis sent over the first draft of the hours employees had individually claimed.”
Kline says Fleishman launched its own internal investigation after City Controller Laura Chick and other city officials refused to pay the firm’s December and January invoices, citing questionable charges. But the allegations of false billings were only brought to the firm’s attention a week ago, he says, and are still under review.
“What we believe from what you brought to us is that many of the billing practice allegations … could have been a misunderstanding of management’s direction,” he told the Times. “If we confirm any of the wrongdoing, we’re going to take appropriate steps. We’ll take very aggressive appropriate steps. It goes directly against our company practice or our company policy to accept or condone misrepresentation of any client billings.”
Kline says other employees who worked on the DWP have said the allegations are “unfounded and untrue.” The firm has retained a libel lawyer, Anthony Glassman, who told the Times the charges were “unfounded accusations by biased sources,” and pointed out that Greenwood is the daughter of former Times senior editor Noel Greenwood.
But the charges were enough for the city’s attorney, who filed a lawsuit against the company, accusing it of submitted false invoices. No amount was specified. It is not known whether he has any evidence for the suit beyond the allegations made by Greenwood.
Mayor James Hahn, who has been the focus on criticism because of his close relationship with Fleishman and with Dowie in particular, joined in the criticism: “It appears to me there were some lax controls here that we need to understand why this contract wasn’t being better monitored.”
Fleishman, meanwhile, was anxious to portray any possible wrongdoing as an aberration.
“We can say with certainty, and unequivocally, that there is no mandate, no model, and no policy at Fleishman-Hillard that requires or suggests 10 billable hours per day,” says Kline. “ Moreover, we find the very notion of fabricating billable hours abhorrent and in violation of everything we stand for as a company. It goes against everything we have stood for in 58 years as a company.
“It has always been the policy of Fleishman-Hillard to encourage employees to bring their concerns forward to management. We reiterate it now.” Kline said employees with any knowledge of wrong-doing should contact either Kline himself or Agnes Gioconda, the firm’s chief talent officer.
In an e-mail to employees, meanwhile, Fleishman chairman John Graham described the allegations as “very disturbing because, if they are true, then a small group of people has violated what we stand for as an agency and put our most valuable asset—our reputation— at risk.
“We are investigating, and we will discover what happened. If we confirm any wrongdoing, we will share that information with the appropriate authorities and take the necessary corrective actions, up to and including termination.”
The firm says Dowie’s leave is not an indication that he did anything wrong. “We are intensifying our investigation. We absolutely have not reached any conclusion,” says Kline. Other sources suggest Dowie was placed on leave so that his presence in the office would not impede the internal investigation.