When controversial East L.A. businessman David Lizarraga tried to join the board of the U.S. Hispanic Chamber of Commerce in 2002, he thought the old network was entrenched, autocratic and wanted to keep him out. So he fought for reform, won a seat and soon became chairman.
But now that he’s about to start his sixth year as chairman of the organization – an unprecedented tenure – critics claim he’s become the entrenched autocrat. What’s more, they claim he’s undermining the group’s mission; some are calling for his resignation.
“During his tenure, there have been many significant bylaw revisions, specifically for the purpose of allowing him to remain chairman,” said Scott Flores, a Denver businessman who is former vice chair of the Hispanic chamber.
“Lizarraga intimidates many people because he’s a rich and powerful man,” said Flores. “But I’ve got nothing to lose.”
The accusations arose at the September meeting of the national Hispanic chamber, an umbrella group representing about 200 local business organizations across the United States. Based in Washington, D.C., the Hispanic chamber brings Latino business issues to the attention of government officials and corporate leaders. The group also seeks federal and corporate contracts for Hispanic companies.
For his part, Lizarraga allowed that he can be “decisive,” saying that the changes in bylaws weren’t made with the goal of concentrating his power but to adopt “best practices” modeled on other national groups.
“When I first came in to the chamber, I saw a good, status quo organization that hadn’t really changed with the times,” Lizarraga said. “I saw the need for the chamber to be more of an advocacy organization, but in order for the chamber to become a change agent, it needed to change.”
He said he has no intention of resigning and maintained that he’s improving the chamber.
“This organization has grown in responsiveness,” Lizarraga said. “You can be open and have discussions, but then you must be decisive. That’s how I am, and I serve at pleasure of the board.”
Lizarraga rose to prominence through his work with Telacu Inc., which he helped start in 1968 as The East Los Angeles Community Union. The organization, an outgrowth of thwarted efforts by Lizarraga and allies to incorporate East Los Angeles as a city, soon landed a federal grant to convert an old B.F. Goodrich tire plant into an industrial park.
The deal quickly produced steady revenue for the non-profit. Since then, the organization has brought many construction real estate deals to the area, often with federal subsidies. Last year, Telacu had revenue of $130 million, according to Hispanic Business magazine.
The success hasn’t come without controversy.
The Los Angeles Times once called Telacu “the Eastside equivalent of Boss Tweed” because of its ties to politicans who steer public construction projects to the organization. L.A. County Supervisor Gloria Molina, state Sen. Richard Polanco and former L.A. City Councilman Richard Alatorre were all elected after they’d worked at Telacu.
Federal investigations have uncovered fraud and mismanagement at Telacu, and in some cases the organization has had to return money. Critics have questioned its non-profit status. Hispanic Business magazine estimated Lizarraga’s net worth in 2002 at $86 million – a relatively high number for the leader of a non-profit.
Since assuming the chairmanship of the Hispanic chamber, Lizarraga has formed a procurement council and a corporate council to pursue the group’s goals of steering more contracting dollars to Hispanic businesses. He also started a Latina Summit event, signed a partnership with the National Minority Supplier Development Council to get more companies certified as minority-owned and spearheaded a lobbying effort to get more Hispanics on corporate boards.
But his critics said the results have fallen short.
“The national Hispanic chamber exists to help moms and pops get business and they have lost that with this chairman,” Flores said. “It breaks my heart because I put in six years of volunteer work with this organization.”
The current controversy has an element of irony. In October 2002, Lizarraga was barred from running for a seat on the Hispanic chamber board. As a result, he organized protests at the organization’s national convention in Los Angeles.
At the time, Lizarraga gathered other dissidents and organized the Coalition of Hispanic Chambers of Commerce for Fairness and Inclusion, which successfully advocated election reform. Lizarraga then won a seat on the board the following year; he became chairman in 2004.
“When this administration took over, they emphasized the importance of inclusion, transparency and solidarity,” J.R. Gonzales, a communications company executive in Austin, Texas, who is the previous national Hispanic chamber chairman, told the Denver Post at the September convention. “Since then, the organizational model has changed and there is some concern and question as to why it was necessary to change.”
Packing the board
The most controversial move in Lizarraga’s tenure came in 2007 when it was decided that board members would be appointed instead of elected. Flores said that has allowed Lizarraga to pack the board with his allies and friends. He also said that change discouraged chambers from sending delegates to the convention.
But Lizarraga said that the board implemented the governance change after conducting a study of other national trade groups.
“Very few, if any, had an elected board,” he told the Business Journal. “They nearly all used the appointed model. So we revised the bylaws to reflect this best practice.”
By appointing its own members, the board can better bring in people with specific skills to help the Hispanic chamber accomplish its mission, he said. “Before, political considerations too often influenced board decisions.”
There are now two Hispanic chambers in Los Angeles, the Latin Business Association and the Latino Business Chamber of Greater Los Angeles. Ruben Guerra, chairman of LBA, which is a member of the national Hispanic chamber, did not return a phone call for comment. Jorge Corralejo, chairman of the Latino Business Chamber, which doesn’t belong to the national Hispanic chamber, declined to comment on the controversy.
The issues came to a head at the Denver convention in September. Lizarraga’s critics said that the convention suffered from poor attendance because of the bylaw changes: Eliminating the vote for board members removed a main motivation for chambers to send people to the event.
Lizarraga blamed the low numbers on the weak economy, but also claimed the situation wasn’t all that bad.
“All the seminars were filled and we were very pleased with the participation,” he said.
The former leaders and board members vow to continue advocating for what they see as a return to democracy.
“I would like to see David resign and his executive committee resign,” Flores concluded.
Lizarraga said he’s staying put.
“We are excited about the future, and we are not going back to the past with an elected board.”
Furthermore, Lizarraga added: “Change isn’t easy, but it must happen.”
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