LA28 financial records subpoenaed

Months after Los Angeles Controller Kenneth Mejia requested documents pertaining to the Summer Olympics and Paralympics, organisers were formally issued a legal demand this week to disclose those needed to ascertain the economic status of the Games.

"As the City's accountant, auditor, and paymaster, the Controller has a responsibility to protect City of LA taxpayers from the impact of the LA28 Olympic Games. The City of LA is the financial backstop if the LA28 Games result in a financial deficit, exposing LA taxpayers to potentially unlimited financial obligations. Angelenos deserve full transparency from LA28 related to all spending and revenue incurred in the process of planning and executing the 2028 Olympic Games," Mejia said in a statement. 

The controller explained that he made a formal request to LA28 on 26 August for financial information to conduct financial oversight of the organisation, with a deadline of 28 September, after he determined that the private organisation is in compliance with only two out of nine subsections of the 2021 Games Agreement. Mejia listed the missing information as including comparisons of financial forecasts vs. actuals, bank statements, schedules and budgets for venues, the identity of contractors and the values and purpose of contracts.

Council members were only shown a list of contracts and their amounts in a Powerpoint presentation briefly during a recent meeting with Chief Legislative Analyst Sharon Tso and City Administrative Officer Matthew Szabo, which Katy Yaroslavsky flagged as "failing to meet the reporting obligation". However, the presentation was deemed compliant for organisers, who, on the 28 September deadline, asserted that they share the requested information with City Liaisons, including the Mayor, the City Attorney, the Chief Legislative Analyst and the Chief Administrative Officer.

The Controller's Office reviewed all LA28 documents within the City's possession and determined that the financial documents requested are either incomplete or wholly absent. "LA28's refusal to comply with my Office's request after years of withholding information that they are contractually obligated to provide to the City of LA is unacceptable. My responsibility is to protect taxpayer dollars, and I will use my full authority under the City Charter to assess the City's financial exposure of hosting the 2028 Games," underlined Mejia.

LA28 has a deadline of 15 days to respond to Controller Mejia's subpoena.

The legal action is the latest episode in the long line of disputes between LA28 and city officials, who have long deemed their partnership to be one-sided.  

"I don't feel like LA28 is behaving as a partner to us," councilwoman Monica Rodriguez said in an interview with the Southern California News Group, after a similar incident in which LA28 missed its October deadline last year to finalise the Enhanced City Resources Master Agreement and dodged questions from local governance.

Council members have long asked for more transparency from LA28 organisers, with concerns about taxpayers eventually footing the bill for the multisport event. So far, LA28 has reported contracts totalling $687.2 million (€610.34m) in an annual report provided to the city. However, LA28 has a budget of $7.263 billion (€6.451bn), according to the report. The City of Los Angeles is on the hook for the first $270m (€237,826,530) of the Games' deficit after LA28's Allocated Contingency fund of the same amount is exhausted. However, if LA28 incurs massive financial losses, the city and state could still absorb Games-related costs.

The city has further requested LA28 to take out a $650 million (€582m) enhanced risk management insurance policy earlier this month to cover event cancellation due to natural disasters, terrorist threats, health emergencies, or other disruptions. CAO Szabo, who made the request, noted that such policies have been the norm in most Olympics since the 2001 terrorist attack on the US, and that all but one Olympic organising committee, Paris 2024, since the Athens Olympics of 2004, had purchased event cancellation coverage.