It started a little over a
month ago with a tip that came from inside the Department of Water and Power:
Raman Raj is still on DWP payroll.
It was hard to believe.
Raj was summarily fired as chief operating officer in February by the new
General Manager Ron Nichols and escorted from the DWP headquarters. How could they still be paying him $22,075.38 a
month, already amounting to nearly half his $264.904.56 annual salary?
It was unthinkable.
After all, here was a guy
who had been fired once before by the DWP. That was a decade ago after he was
blamed for a costly series of lawsuits involving harassment, discrimination and
retaliation. An investigation into what had gone wrong found Raj had given Brian D’Arcy, the powerful IBEW union boss “too
much influence in the management” of the utility and shielded union
employees from disciplinary action. Raj could not be trusted to “act in
the department’s interest,” if it conflicted with his own…
Yet, Mayor Antonio
Villaraigosa ordered Raj rehired in 2007 in the No. 2 job and put him in charge
of day-to-day operations under inexperienced General Manager David Nahai, a
lawyer with expertise in environmental issues who had been DWP Commission
by those who worked for him, Raj – backed by D’Arcy who for years has virtually
run the DWP – clashed with Nahai to the point the mayor hired a management
psychologist to intervene and make an oral report to him. A short time later,
Nahai was forced out and David Freeman, who as DWP GM in 1999 had originally
hired Raj, was put in charge of the utility once again.
In the tortured history of
the DWP over the last 13 years, these three conspiratorial figures – D’Arcy,
Freeman and Raj – stand out for the failure of their leadership, their failure
to achieve the goals of cleaner energy and water and for the waste of the
It has taken a while to
find out what Raj’s status is but late Friday afternoon, chief spokesman Joseph
“In response to your
question regarding whether Raman Raj is on disability, please be advised that
How is it possible that a
guy earning roughly $1,000 a day going to work in a powerful position could
suddenly develop a disability that could be paying his full salary even six
months after he was fired, even two years from now?
situation is a widespread practice of waste and abuse of taxpayers
money,” said Nick Patsaouras, who served as president of the DWP
Commission until quitting in October 2008 in protest over what was going on.
witnessed settlements paid to dishonest, incompetent, fired employees because
of carelessness, incompetence, lack of documentation and fortitude on the
part of management. Unfortunately all this waste and abuse occurs in ‘closed
door sessions’ out of the reach of the press and the public.
the Rate Payer Advocate’s office in evaluating rate increases will shine the
light on this malpractice among others.”
Nichols, who declined
comment citing this as a personnel matter, sent employees this terse
announcement: about Raj’s being fired back on Feb. 4.
“Raman Raj, our Chief Operating Officer, is
moving on from the Department to the private sector.
“Please join me in wishing Raman
well in the next stage of
his career. Effective
today, any pending
matters that would have required his attention should be forwarded to the office of the General Manager.”
Just as he did a
decade ago, Raj – an “at will” employee who could have been fired
without cause and without severance – threatened to sue. It worked then and got
him a settlement through a separation agreement. And it worked again this time.
On March 24, fully seven weeks being relieving Raj of duty and dismissing him, Nichols signed off on a “Separation Agreement and Release of Claims” (Raj Separation-1.pdf) that was reached
“solely in order to clarify‘ and resolve any issues or disputes- that may exist between them arising out of-the employment relationship and/or its
accrued vacation time for another seven weeks.
And it gave Raj until his
termination date of May 13 to apply for disability under the Employee
He did and he got it -
though the plan administrator Sangeeta Bhatia has yet to make it clear what the
nature of his post-dismissal disability is, how much Raj is being paid or for
how long. In a letter – the DWP refuses normally to respond to California
Public Records Act inquiries by email – she said details will be delayed
because unspecified “unusual circumstances” exist.
Ramallo in an email had
the courtesy to explain the disability options available to Raj.
are provided for in Section V of the Plan. The basic benefits provided
are Temporary Disability (TD), Extended TD, and Permanent Total Disability
(PTD). To be eligible for these benefits, an employee must be a “Full”
member of the Plan which means he/she completed 26 weeks of continuous service.
At that time, the member begins to contribute to the Disability Fund and
becomes eligible to receive them one day later.
“In addition to being
a Full member of the Plan, the member must also demonstrate that the disability
itself began while the member was still contributing to the Plan.
benefits is defined in the Plan document and depends on the length of
continuous service at the time the disability began. For example, the
first two weeks at 100%. next 4 weeks at, 85%, next 2 weeks at 60% next 26
weeks at 50%, next 18 weeks at 40% etc.
“However, salaried managers who are on disability and whose disability
status are reviewed and continuously verified are eligible to receive, for up
to two years, payments equal to their regular salary.”
“When a claim for
Disability benefits is received by the Disability Plan, staff verifies
employment status. Subsequently, in accordance with Plan provisions, the
disability claim is submitted to the Medical Director for review. The
Medical Director makes a determination as to whether there is sufficient
documentation to qualify for Temporary Disability benefits. The Medical
Director continues to review medical records as necessary to determine
qualification for benefits.
Clearly as a salaried
manager, Raj is eligible for two years of salary worth nearly $530,000 over the
next two years if his disability status continues to be verified.
He would have been in an
even more enviable situation if the deal the DWP Board approved after he
rejoined the utility had been finalized in August 2008 – a time when rate hikes
of up to 25 percent were being approved and the mayor was increasing payments from
the power fund to the city general fund from 5 to 8 percent, pushing it past
the $250 million mark on top of the 10 percent utility tax.
was given an extra $152,000 toward his pension which would have allowed him to
buy significantly more credit towards his retirement payment than he has earned
with his five years of service. Then City Controller Laura Chick challenged the
board decision and the next day Raj backed down on the pension payment demand
Three months before the
pension flap, Raj had become the target of serious conflict of interest charges
over possible steering $5 million in contracts to firms that had retained him
prior to his return to the DWP.
to employees in June, months after he was out of the building.
The farewell message was undated, part of
his settlement agreement — and it was unctuous, claiming credit for others
achievements and warmly thanking the staff that largely disliked him. He referred to his “mixed emotions” about
leaving the DWP and his pride in the achievements they made
“All this we accomplished in times of
unprecedented change and undue external pressures. The underlying elements that
made all this happen was strong teamwork cutting across silos and a focus on managing change effectively,” he said.Inside the DWP, it
was seen as leaving the door open to come back for a third try.
“It was an inside joke within DWP that Raj was actually
running the DWP while David Nahai, David Freeman, and Austin Beutner were
General Manager/figureheads,” said one manager who has tracked what is going
“It seems extremely
dubious from my point of view that in our new environment of ‘transparency’ we
are still paying Raman Raj disability. It seems like his influence is
still looming. It seems like in light of his LATE, undated farewell letter
he is leaving the option to return, AGAIN.
“It seems like if Ron
Nichols gets terminated for not getting another rate increase, Raj may return
to fill the vacuum. We are all rooting for Nichols, he is a decent