“Nothing of substance”?
Early this year we called attention to the concern and foresight shown by Mr. Thomas J. Donohue, the President and CEO of the U.S. Chamber of Commerce. “One of the least discussed aspects of our transportation crisis”, he pointed out, “is the status of our ports.”
We commented further that Mr. Donohue was “just one of a number of enlightened officials who are being ignored by port bigwigs who consider themselves to be among the untouchables. In all too many instances these irresponsible and unaccountable port authoritarians have gone unchallenged, but they’re sadly mistaken if they believe they can escape scrutiny.
“Bill Virgin, as you are aware, took Seattle port officials to task as few weeks ago with a highly critical column in the Seattle Post-Intelligencer. He pulled no punches when he exposed the many extra-curricular activities and lavish spending by officials at the port. His column was a follow-up to an earlier three-day series in the same Seattle P-I, and led one to suspect that his pointed remarks were an indication that others might be keying in on the port’s faulty operations as well as its irresponsible actions …” Others, the state auditor for example, are indeed keying in.
Glenn Farley at KING 5 News had this to report on December 21st:
“Port of Seattle audit could prompt criminal investigations … Audit leads to more investigations.”
“SEATTLE – A scathing audit of construction practices at the Port of Seattle may lead to a criminal investigation.
“A nearly 350-page audit released this week looks at construction projects at the Port of Seattle. Most of the major ones are at Sea-Tac airport, including the multi-billion-dollar third runway.
“The audit finds more than $ 100 million was mishandled. While the audit looks primarily at ways to make the port’s construction practices work better, the auditors cite specific cases where there are possible violations of state law. They include altered invoices, contracts that were allowed to grow without competing bids and altered audit evidence – an allegation the Port disagrees with, saying all they did was compile the papers the auditors wanted in binders.
“According to a spokeswoman for the Attorney general, because this is a performance audit, they would have no enforcement role – that would be up to the Port Commission to carry out changes.
“But the federal government is a different story. A spokeswoman for the U.S. Attorney’s Office says the audit could be a starting point for investigations by several federal agencies.
“‘The office of the Inspector general with the federal Department of Transportation contacted us this morning. They want a briefing and follow up on the audit,’ said Brian Sonntag, the state auditor. ‘We’re going to meet with them in January …’”
“An FBI spokeswoman would neither confirm nor deny that the federal law enforcement agency was looking into the allegations.
“But the auditor’s department says the FBI was sent a copy of the report.”
Kristen Millares Young at the Seattle Post-Intelligencer is also among those keying in, and she dealt with the audit’s findings on December 21st and on December 23rd. In her December 21st column headlined, “State audit slams port’s waste”. She wrote:
“Sweeping changes should be made to the Port of Seattle’s management structure and culture to help prevent more public funds from being squandered, state Auditor Brian Sonntag said Thursday in a report that found the agency broke state laws and wasted almost $ 100 million in taxpayer money.
“The 334-page audit, which calls for revision to state procurement laws to prevent a repetition of the port’s poor construction management, has prompted state lawmakers to reconsider the Port of Seattle’s level of oversight, which along with the audit’s findings will be discussed at a public hearing in Olympia on Jan. 9.
“The port wasted $ 97.2 million in taxpayer money during construction projects and contracts active from January 2004 to March 2007, the audit found in its review of the port’s $ 1.6 billion in construction projects during that time …”
“‘The Port Commission provided insufficient oversight over contracting practices and the port did not have adequate systems in place to protect taxpayer dollars from misuse, abuse and misappropriation,’ said the audit, which found ‘serious and pervasive issues in the port’s management …’”
“The audit – authored by Alexandria, VA-based Cotton & Co. and Carlsbad, CA-based CDR Consultants – revealed that port management got too close to contractors on projects, to the point that ‘in some cases, vendors control projects and make decisions that should be made by the port …’”
“I have been working on construction audit projects and construction dispute resolutions for 30 years, and these guys amaze me”, was the comment made by CDR Consultants President Patti Jones.
“In other findings, the audit said the port’s ‘executive management has withheld information from and sometimes had misinformed the commission about the terms and progress of construction projects.’”
“Such actions left the port’s construction management ‘vulnerable to fraud, waste and abuse.’ The audit said the port has ‘no controls in place to prevent a variety of fraud schemes characterized by bribes, kickbacks, and illegal gratuities …’”
“Jones called the port’s airport construction projects ‘a breeding ground for fraud’, and added that auditors ‘don’t have to prove fraud, we just have to show the conditions exist within the organization that fraud could occur.’”
“The audit also chided employees for hindering the performance audit, impeding access to information and sometimes being “uncooperative.” The audit was authorized by voters in 2005 with Initiative 900.
“The majority of the decisions lambasted by Sonntag took place during the reign of Dinsmore, whose lavish and controlling tenure and cozy relationships with contractors were detailed by the 2006 Seattle P-I series ‘On the Waterfront’…”
“The main findings of the port audit were:
• The port wasted $ 97.2 million in taxpayer money during construction projects and contracts active from January 2004 to March 2007.
• The port lacks policies to safeguard public assets from misuse, abuse and fraud.
• The Port Commission has largely delegated decision-making responsibilities on major projects to management and staff.
• Port management has withheld information and misinformed the commission about the terms and progress of construction projects.”
Ms. Young’s December 23rd follow up was headlined: “Dinsmore dismisses audit”. She reported:
“Former Port of Seattle Chief Executive Mic Dinsmore said Friday he believed a damning report by the state Auditor’s Office contained ‘nothing of substance’, despite its findings that Dinsmore and other top port executives violated state law by giving deals without competition to contractors with whom they had cozy relationships. On Thursday, the state auditor released a 334-page document that blasted the port’s management of Sea-Tac Airport construction projects from 2004 to 2007, saying that $ 97.2 million was squandered and that staff broke the law and the agency’s own policies, leaving the port ‘vulnerable to fraud, waste and abuse’…”
“There are a lot of ‘gray areas’ at the port. Top employees sometime leave to take lucrative jobs with port contractors after the major deals have been brokered,” Young noted.
“With two new commissioners coming on board in January and a new chief, (Commissioners) Hara and Creighton are hopeful that the port can right its course, but they will have to do so with a staff that audit author David Cotton described as giving half-truths.
“During the nine-month process, Cotton said, ‘we learned that when they would tell us something, we had to evaluate it further and parse it. A lot of times they would tell us something that was flat not true.”
Eleven port managers refused to provide signed statements attesting to the accuracy of the information they provided to the auditors. Such statements, which are usually routine in audits, include language saying the managers had “no knowledge of any allegations of fraud or suspected fraud” in the Port’s construction contracts.
Small wonder then that newly elected Port Commissioner John Creighton has revealed that the port plans to “hire an outside investigator to look at direct cases of fraud and misappropriation.”