The Los Angeles Times from Los Angeles, California • 3

Sunday, March 28, 1982 Part I 3 Cos Angeles Slimes POVERTY: Barrio Is Left Behind Academics Skirt Technology Issues Suggest Some Restrictions but Urge More Study of Scholar-Industry Ties By LEE DEM BART, Times Science Writer JOEL P. LUGAVERE Los Angeles Times David Lizarraga, president of East Los Angeles Community Union, in agency's office in 1980. Continued from First Page est. The loans, in some cases, appear to have violated st'te laws governing nonprofit organizations. TELACU's president, David Lizarraga, borrowed thousands of dollars for private investment purposes and his name was sometimes "whited-out" on TELACU ledgers.

TELACU subsidiaries also paid off a $10,000 bank loan Lizarraga used for his political activities. A former top financial officer left TELACU three years ago owing about $65,000, which a TELACU attorney said he is now trying to recover. The same officer also drove off in a TE-LACU-owned Mercedes-Benz that he still has not returned. He and another top TELACU executive remained on the agency's payroll for months after they resigned, collecting a combined total of more than $50,000. TELACU's overseas travel expenditures have ranged from a trip to Mexico City for the board of directors and their guests to a $25,000 bill for travel and other expenses connected with a trip to Switzerland and Lebanon.

The purpose of the latter trip, described by one of the travelers as a "wild goose chase," was to find financing for a hotel and convention center that was never built. Revenues have been used during the last three years to make about $65,000 in political contributions, often to politicians who helped steer millions of dollars in grant money to TELACU. Lizarraga, who has headed TELACU since 1974, refused to be interviewed by The Times about these transactions or any of TELACU's activities. When asked for an interview, Lizarraga re- WATSONVILLE, presidents of five leading American universities recommended Saturday that some restrictions be placed on the interaction between industry and academic institutions and their faculties in order to retain traditional scholarly values. At the same time, they sidestepped specific issues and called for more study because they could not agree on what constitutes appropriate interaction.

The university presidents, who met for three days with senior executives of 10 high -technology companies, said their concluding 10-page statement is not intended to make academic policy but to encourage continuing discussion of problems that have been created by the emerging technology of genetic engineering. "We want to stimulate review of various kinds of regulations within universities," said Donald Kennedy, president of Stanford, at a press conference after the closed-door meeting. Toothless Feeling "As to teeth," he said, "I do not believe we have any." It is up to the faculties to decide what to do, he said. The tentativeness of the group's recommendations was expressed by Derek Bok, president of Harvard. "We are at a very early stage in trying to come to grips with these issues," he said.

"Over time one would hope that some consensus as to what is the proper solution would emerge." Others attending the meeting at the secluded Pajaro Dunes retreat on the Monterey Peninsula included David Saxon, president of the University of California, Marvin Gold-berger, president of Caltech, and Paul Gray, president of the Massachusetts Institute of Technology. Advisers From Industry The industry representatives said they had been invited in an advisory capacity to help academics deal with university problems. Potential commercial applications of genetic engineering to the pharmaceutical, chemical and agricultural industries have led some companies to offer large sums of money to universities for research. They have also led individual biologists to become substantial stockholders in companies that seek to capitalize on their skills. As a result, there has been fear of threats to intellectual freedom and to the open pursuit of knowledge that is the basis of the academic enterprise.

Concern has also been expressed that new knowledge will be kept secret for private gain or that professors will eschew research that has no immediate commercial value. "The traditions of open research and prompt transmission of research results should govern all university research, including research sponsored by industry," the conference's concluding statement said. "Agreements (with industry) should be constructed in ways Please see ACADEMIC, Page 20 Carter reelection drive and the national Democratic Party, which had to return $2,500 because the Lizarragas contributed more than their limit. Lizarraga served as southern chairman of the California Democratic Party during 1979-81. He has also served for the last two years as chairman of Hispanic American Democrats, a Latino caucus within the Democratic Party.

For a while, TELACU Industries provided office space and a secretary for the Latino caucus, according to records and interviews by The Times. Lizarraga and his political activities are now the subject of a wide-ranging criminal investigation of TELACU by the inspector general's office of the U.S. Department of Labor. The probe was sparked in 1980 by charges that TELACU directed participants in a federally funded jobs program to attend political rallies for Rep. Edward R.

Roybal (D-Los Angeles) 'If David (Lizarraga) has any smarts, he gets himself lawyers to protect him and his lawyers probably tell him to let things subside and don't M7A TELACU business suite and stored its expensive furnishings. In the meantime, TELACU has millions of dollars left over from the final days of the Carter Administration to support its administrative overhead and finance new business ventures through the fall of this year. And the Reagan Administration recently gave TELACU $3 million to help construct a three-story building that will house its new, more spacious offices on one floor. TELACU's latest available financial report shows that it, its subsidiaries and affiliates had $15.5 million in revenues in 1980 nearly $11 million in government funds, $2.4 million in interest, and the remainder mostly from its government-subsidized investments. Revenues were up 25 from the year before, but profits plunged about 60 -from $490,000 to $188,000.

There were dramatic increases in general, administrative and interest expenses. A TELACU spokesman, John Echeveste, added that bad business investments accounted for "the bulk" of the losses. TELACU officials refused to allow The Times to review any of its records, including even the resumes of its executives. Their reluctance stems from being "under heat" from the federal investigators, said TELACU's founder, Esteban Torres, now a candidate for Congress. "It's very obvious to me that somebody is trying to do an ax (job) on TELACU, maybe on David," said Torres, who recommended Lizarraga as his successor.

"If David has any smarts, he gets himself lawyers to protect him and his lawyers probably tell him to let things subside and don't talk," Torres said. TELACU lawyer Rubalcava said Lizarraga will not talk to reporters while the federal investigation is pending. "David distinctly has the possibility, if he is charged and if he is convicted, of facing a custodial sentence. Why anyone would expect someone to contribute to his own demise (by talking to reporters) is beyond me," Rubalcava said. The federal investigation of TELACU began, Rubalcava said, "with allegations all over the place." "I mean, it was like you took a big mound of pizza or spaghetti and you had a big food fight and the stains the allegationswere everywhere, everything was covered," he said.

Now nearing completion, the investigation has entailed an across-the-board audit of TELACU's 300 bank accounts and myriad intercompany transactions that have taken auditors two years to untangle. "The intercompany loans and transactions are Please see POVERTY, Page 11 McCloskey Fears Loss to 'Apathy' by Public By KEN REICH, Times Political Writer plied: "I don't want to talk to you" and abruptly shut the door of his Covina Hills home. An attorney for TELACU, Dominick Rubalca-va, said, "He doesn't want to talk to you about what you're interested in talking to him about." Lizarraga, 40, son of a minister, started his community work years ago in the barrios of East Los Angeles as a mediator between youth gangs. Today, he wears conservative business suits and sports a well-groomed beard. Lizarraga draws a salary that TELACU officials refuse to disclose, and like TELACU's six other highest-ranking employees, Lizarraga does not live in East Los Angeles.

He owns a home with a service entrance and a boat parked in the driveway on 11 acres of land in the Covina Hills. He also owns another house in Ontario, a Brentwood condominium and desert land in San Bernardino County, property records show. He drives a TELACU Mercedes-Benz and travels as much as once a week on business, often to Washington, D.C., where he stays at the TELACU townhouse. His organization has contributed heavily to political campaigns, and he and his wife personally contributed about $8,000 during the 1980 election year. Most of it was given to the Jimmy and to walk precincts for Jimmy Carter.

During the probe, government money continued to pour into TELACU at a rate of about $10 million a year from more than a dozen sources. The grants ranged from $400,000 from the U.S. State Department for anti-poverty programs in Ecuador to $2 million from the Federal Railroad Administration for TELACU to invest in rail-related businesses. Much of TELACU's funding has come from the federal Community Services Administration. The agency awarded grants (requiring 10 matching funds) to help pay TELACU's administrative costs such as salaries and office space, and to provide venture capital for business investments.

The grants were supposed to benefit TELACU's "special impact area" which began as the impoverished eight square miles of unincorporated East Los Angeles and was expanded in 1979 to include all of California. The Community Services Administration was shut down by President Reagan last year after it was repeatedly criticized for its mismanagement and lack of safeguards. Apparently expecting hard times ahead, TELACU has laid off some employees, closed its Rep. Paul N. (Pete) McCloskey sounding discouraged about his prospects in the Republican U.S.

Senate primary race, said Saturday that "pure apathy" in the electorate may hand the nomination to Rep. Barry Goldwater Jr. "There is not a great deal of public interest in the substantive issues," McCloskey said of the voters. The result, he told United Press International broadcasters meeting in Newport Beach, is that there is little public pressure on Goldwater to agree to debate his GOP opponents. Goldwater who has avoided most confrontations with the other Republican candidates in the race-had declined to appear before the broadcasters.

'Resigned to Defeat" Two other candidates who were there San Diego Mayor Pete Wilson and Maureen Reagan both disagreed with McCloskey on the amount of public interest in the race, and the propsects of defeating Goldwater in the primary. Wilson called McCloskey ''resigned to defeat." He said that for his part he has increasing confidence that the contest is coming down to a race between him and Goldwater, particularly among those most likely to vote. "I think there is public interest in the issues," Wilson said. Reagan said she felt that McCloskey ought to campaign more around the state and take more audience questions before making up his mind about public interest. He is wrong if he thinks there is no interest, she said.

McCloskey said he is particularly discouraged at apparent lack of interest in proposals he has made to cut back the federal budget and to remove U.S. military advisers from El Salvador. Goldwater Favored The Mcnlo Park congressman said "there seems a widespread view that it doesn't make much difference who is elected to public office" and that it isn't worthwhile comparing the candidates. The result is that Goldwater, with the highest name identification, remains the favorite in the primary, even though he rarely engages in substantive discussion of the issues, McCloskey said. Also appearing before the meeting were two candidates for the Democratic nomination state Sen.

Paul B. Carpenter of Cypress and Fresno Mayor Daniel K. White-hurst. The leading Democratic can- Please see CLOSKEY, Page 21 Politicking: Another Murky Area for TELACU 2533 h.iru wins SEPTEPJe.D!J Jul oaDfcuoKCAil.DSCAB.ClA The Labor Groups Push Bill to Regulate 'Union Busters' By HARRY BERNSTEIN, Times NOT NEGOTIABLE do i sa 3 2 i or. i 1 IH4timit DILUVC DVC-i 51,000.00 F.EIMBURSES'.EHT FOR By ROBERT WELKOS and CLAIRE SPIEGEL, Times Stafj Writers It was a gala fund-raising dinner for Sen.

Alan Cranston in an ornate ballroom of the Century Plaza, and among the contributors reserving $2,000 tables was David Lizarraga, president of The East Los Angeles Community Union (TELACU). Cranston's campaign reports show that the table was paid for with personal contributions of from Lizarraga and Carlos J. Garcia, TELACU's general counsel. However, records obtained by The Times show that on the same day as the Cranston dinner Sept. 20, 1979 Lizarraga and Garcia were reimbursed $1,000 each by a TELACU subsidiary.

On Garcia's check from TELACU Industries Inc. was written: "Reimbursement for Alan Cranston dinner." Garcia could not recall the contribution, saying, "There arc so many." Refuses to Be Interviewed Lizarraga refused to be interviewed by The Times. Federal election law prohibits corporations of all kinds from making contributions to federal campaignsor reimbursing employees who have made donations. TELACU's attorney, Dominick Rubalcava, refused to comment on the 1979 reimbursement. "All I can tell you (is), as of now the agency is receiving professional advice with regard to political contributions," Rubalcava said.

During the last three years, TE-LACU has made about $65,000 in political contributions through its subsidiaries, often to politicians who vote on TELACU's funding, records show. The donations were made to state Lalior Writer navies of all partners or "profit sharers" in the consulting firms. Allow the state to investigate the character and responsibility of the applicant, in the same manner as it investigates applicants for other licenses, such as building contractors. Impose restrictions on the re-licensing of anyone whose license has been revoked. Provide for a $100 filing fee to finance the law without extra cost to the state.

The state Labor Commission would administer the law. Provide that consultants who ensistcntly advise their clients to take actions in violation of federal or state laws have their license revoked. A Law With 'Teeth' Require license revocation for consultants who knowingly "put out false statements," IT .1 general counsel, carries notation at bottom, "Reimbursement for Alan Cranston dinner." TELACU's file copy of Sept. 20, 1979, check for $1,000 issued to Carlos Garcia, organization's In a move aimed at curbing so-called "union busters," California unions have launched a drive for legislation that would require all labor-management consultants in the state to be licensed. Unions throughout the country have been trying to halt the rapidly growing industry of consultants who specialize in helping employers avoid unionization or break unions.

Last year such consultants grossed more than $500 million, a House labor subcommittee estimated. But the California campaign announced Friday would be the first in the nation to embody legislation that could be used to fight "unscrupulous consultants who use every dirty trick in the book to break unions," said William Robertson, head of the Los Angeles County Labor Federation. Provisions of Law The campaign centers on a measure supported by California Labor Commissioner Patrick Ilcnning, an appointee of Gov. Edmund G. Brown and introduced by Assembly majority leader Mike Roos (D-Los Angeles), that would require labor-management consultants to register with the slate, obtain a license and face loss of it for failure to comply with standards set up by the legislation, The proposed law would: Require disclosure of the LACU spokesman George Pla, who has since resigned.

"We don't go around giving to people who don't ask," Pla said, explaining which politicians get donations. He added that contributions are made to "individuals who are sympathetic to what we are doing." Last year, for example, donations of $3,000 each were given to Los Angeles City Councilman David Cunningham and Los Angeles County Supervisor Ed Edelman, who, by virtue of their votes and key government posts, have helped steer millions of dollars in federal grants to TELACU, The city and county of Los Angeles have awarded TELACU about $7 million in grants since a federal criminal investigation of TELACU was launched by the U.S. Department of Labor in 1980. Cunningham received the contribution when he was chairman of the City Council's grants committee voting on TELACU's grant applications. He said: "I don't sec any conflict of interest." TELACU, he explained, "has been involved in the political process and I see nothing wrong with it." Edelman, whose supervisorial district includes TELACU, said he is concerned about the federal criminal probe of the agency, but has repeatedly voted to continue funding TELACU because "they've done a fairly good job of serving the people Please see POLITICS, Page ID and local campaigns, governed by less restrictive laws which permit corporate contributions.

TELACU officials said the political contributions are legal because they were not made directly from the government grant money TELACU received. Instead, TELACU officials said, the organization has made political donations with the profits generated by TELACU subsidiaries which are, however, substantially supported by government grants. Using profits to make campaign contributions to politicians who support TELACU is "the same thing" and just as important as spending the money on social services in the community or other charitable goals, according to TE iicnning sain mat tne proposal could be likened to the Better Business Bureau system of advising the public about companies with "bad records," but, he said, "our law would have some teeth to it." Several employer organizations have indicated to Roos and Denning that they arc sympathetic to the concept of the proposed law because it would help identify reputable consultants. But they arc withhold-Plcase see LABOR, Page.