By Helga Gendell
Part XII of the Marina del Rey history series addresses an attempt by the then chairman of the Los Angeles County Board of Supervisors to propose a policy that would balance the public’s right to know about Marina del Rey development against the need to attract investments in county projects.
Los Angeles Times reporter Jeffrey Rabin’s article, “(Supervisor Ed) Edelman Wants End to Secrecy in Land Leases,” was written on November 15th, 1989, regarding the undisclosed Saudi investors in Marina del Rey who became partners with lessee Abraham M. Lurie.
Rabin’s article states, “Responding to disclosures that Saudi Arabian businessmen and arms brokers secretly bought a major stake in leases on public land at Marina del Rey, Edelman on Tuesday proposed that the county require that future investors in county-owned property be publicly identified.
“Edelman, chairman of the Board of Supervisors, told his colleagues that he will propose adoption of a policy next week that would balance the public’s right to know who is doing business on public land against the need to attract investment in county projects,” wrote Rabin.
[The Board of Supervisors at the time, in addition to Edelman, included Pete Schabarum, Mike Antonovich, Deane Dana and Kenneth Hahn].
Rabin’s article continues, “After a two-month investigation, the Times reported in articles on Sunday and Monday that the Marina del Rey holdings were secretly purchased by a group of Middle Eastern investors headed by Khalid and Abdul Aziz Al-Ibrahim, billionaire brothers of Saudi Arabia’s King Fahd.
“The articles also reported that the supervisors approved the deal without attempting to learn the investor’s identities.
“‘We should try to work out a policy that will bring that information to the public,” Edelman said Tuesday. It’s not like a private corporation. It’s a public body, and the public is entitled to know. At the same time, we don’t want to give up opportunities so the county loses money.’”
“The Ibrahim group, in a $21.8-million cash transaction, became partners with the Marina’s largest developer, Lurie, in three existing hotels, a planned luxury hotel, two apartment complexes, shops, offices, restaurants and more than 1,000 boat slips on 63 acres of county-owned property,” Rabin reported.
“Edelman, the only supervisor who did not vote on the Marina deal last summer, said he would have liked to have known the identities of the investors.
“But whether Edelman’s proposed policy will be adopted is an open question. Rather than discussing the issue, two of the supervisors instead sharply criticized the Times article.”
Rabin’s article continues, “Supervisor Schabarum accused the newspaper of being ‘completely off base.’ He said the supervisors were told by the county counsel’s office that approval of the sale could not be unreasonably withheld. ‘That is the only recommendation’ the board had received from its lawyers, he said.”
“Supervisor Antonovich added that ‘the board’s hands were basically tied’ in approving the secret investors,” the article stated.
“A year ago, however, the county counsel’s office advised the Department of Beaches and Harbors, which oversees the Marina, that the county could ‘just say no’ to such a deal to protect itself in case the money being invested had been illegally obtained.
“The memorandum, authored by Frank Scott, principal deputy county counsel, warned that if ‘illegally obtained funds were used to finance the buyout’ of Marina property, the county’s economic interest could be jeopardized,” according to the Times article.
“‘Tainted money and those it touches could be the subject of criminal and civil lawsuits,’ the memo said. Such lawsuits could disrupt Marina businesses, possibly reduce county revenues and make the property subject to seizure.
“Under the terms of the lease, ‘the county has the up-front power to protect itself from illegal financing of assignments,’ the memo said, adding that the lease ‘allows the county to just say no’ to the transaction,” stated the article.
“In July, the Department of Beaches and Harbors obtained legal advice from an outside law firm, Skadden, Arps, Slate, Meagher & Flom, urging that the county obtain specific financial guarantees from the investors because it could be difficult for the county to pierce the veil of secrecy surrounding them.
“Despite the advice, county officials did not examine the finances, nationality or background of the investors, nor did the disclosures of their identities.
Instead, they relied on assurances from Chicago attorney Cornelius J. Sullivan that his clients, the investors, were successful foreign business people who were not involved in criminal activity.
“No evidence has surfaced of any criminal taint on the Marina investment funds,” Rabin’s article continued.
“The deal gave the investors a 49.9 percent in the Marina properties of Lurie, a major campaign contributor to the supervisors. If Lurie had sold more than 50 percent, his Marina leaseholds would have been reassessed for property tax purposes.
“Noting the complexity of the deal and the desire of the investors to avoid taxation, the county assessor’s office has begun a review of the transaction to determine whether the properties can be reassessed at market value,” the Times article stated.