Friday, December 1, 2017

Atlanta ethics office investigates Hartsfield-Jackson International Airport (KATL) conflict of interest issue

Hartsfield-Jackson International awarded a lucrative contract and contract extensions to a concessionaire that’s in a partnership with the wife of an airport executive.

The city of Atlanta’s ethics office is conducting a preliminary investigation into the matter involving airport executive Cortez Carter, according to ethics officer Jabu Sengova.

Carter was placed on paid administrative leave after the city of Atlanta learned that his wife Charisse Works Carter has a business that partnere

Some of the contracts with Hojeij pre-date Carter’s time as an executive for the world’s busiest airport. But the company also has been chosen for several new contracts for restaurants and shops on Concourse B, C and E while he’s been in the job.

The latest contracts hang in the balance, pending approval by Atlanta City Council and the mayor.

Atlanta Mayor Kasim Reed’s deputy chief of staff Katrina Taylor Parks said “everything is under review.”

Hojeij contract wins

Carter was hired in 2015 to lead an airport division called ATL Business Ventures. But earlier this year he was promoted and added commercial development to his responsibilities — including concessions and concessions development.

In November 2016, the city approved a deal to award contracts for a few new eateries, including a Wendy’s on Concourse B to be operated by a Hojeij joint venture.

Last month, the Atlanta City Council approved an extension of contracts for restaurants at Concourse E, including a contract held by Hojeij. It was the fifth extension of the contracts, following three extensions in 2016 and a fourth in May 2017 — all while Carter was at the airport.

The contract extensions were offered due to delays in the selection of new restaurant contractors, amid turmoil at City Hall.

As part of an Atlanta City Hall bribery scandal, chief procurement officer Adam Smith was fired in February and later pleaded guilty to conspiring to accept more than $30,000 in bribes for helping a vendor win city contracts.

In October and November of this year, while Carter was overseeing concessions, Hojeij was notified it was selected as one of the companies to open new restaurants on Concourse E and selected for a retail contract. Those are among the contracts that have not yet been approved by city council.

The mayor’s office says Carter was not involved in decisions to extend contracts and was not on evaluation committees for other concessions contracts Hojeij competed for.

The ethics office is looking into whether Carter should have filed a conflict of interest disclosure report because of his wife’s partnership. The ethics office website says city officials and employees “must file an online conflict disclosure form when they have a financial or personal interest in a decision, legislation or matter pending before the individual or his or her agency.”

The ethics office does not have any written record of such a conflict of interest disclosure report from Carter, or any record of recusal from decision-making by Carter on concessions contracts.

But there’s more than one way the city can learn about a potential conflict. Concessionaires are also asked about potential conflicts of interest when they compete for airport contracts.

Charisse Works Carter owns AirWorks Concessions, which was chosen in 2015 as a Hojeij partner for a restaurant at Reagan National Airport in Washington, D.C., according to Hojeij.

On a contractor disclosure and declaration form, Hojeij was asked to “disclose any interest held with any City employee or official, or family members of a City employee or official, which may yield, directly or indirectly, a monetary or other material benefit to the Respondent or the Respondent’s family members.”

But if there was any disclosure by Hojeij of a potential conflict, it did not reach the ethics office in the most recent round of contracting. The ethics office does not have jurisdiction over the procurement process, but it is sometimes asked to review documents if there are concerns.

AirWorks and Hojeij

Hojeij said in a statement that AirWorks was part of a mentor-protege program and the two companies did not work together in Atlanta.

Charisse Carter’s LinkedIn profile lists her background in telecommunications with a degree in electrical engineering from Purdue University and an MBA from Loyola University in Chicago.

AirWorks was registered as a business in Illinois in 2012, when Cortez Carter was a managing deputy commissioner for Chicago airports O’Hare and Midway. A Hojeij spokesman said the company was introduced to Charisse Carter in 2014 through another company and signed a letter of intent in February 2015, before Cortez Carter got the job at Hartsfield-Jackson.

“We believe in the integrity of the procurement process and are confident that any awards to HBF will be made based on the merits of our proposal,” Hojeij said in a written statement.

Rick Grimm, CEO of the National Institute for Government Purchasing, said conflict of interest disclosures are aimed at avoiding “optics issues… because it’s about public trust and it’s about transparency.”

As an airport official, Carter was required to fill out an annual financial disclosure. But the questionnaire is focused on direct transactions with the city of Atlanta. That questionnaire may not have applied in this case because AirWorks was awarded business in Washington rather than in Atlanta.

That’s why the city’s ethics office investigation centers on whether Carter should have filled out a separate conflict of interest disclosure.

The narrow focus of the questionnaire may miss relationships in concessions that span different airports. Leading concessionaires such as HMSHost, Delaware North and Areas do business around the country and the world, establishing an array of partnerships with other companies.

“It’s a web of relationships and holdings that are literally multi-national companies,” said Kerwin Swint, a professor of political science at Kennesaw State University. “It complicates the task of accountants and auditors.”

Grimm said the flipside of conflict of interest concerns is that “when you begin to eliminate competition because you think there may be a conflict of interest that may be a few generations removed, that also creates a challenge,” because a goal of public procurement is to maximize competition, he said. “That’s when you get the best value.”

“I know situations where it would be perfectly legitimate for the wife of this husband to be a contractor, as long as she’s not selling directly,” Grimm said. “Other places would say that’s absolutely not acceptable. And that’s why you have a standard in place.”

He said legislating such ethical issues is done “reactively, because some problem has occurred and then we create a legislative framework that says ‘thou shalt’ and ‘thou shalt not.’”

“But it really is about understanding your role in public service, which is to make sure the optics are clear.”

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